Scrap ‘punitive’ stamp duty and shake-up ISAs: What the City wants from the autumn statement
The City’s eyes will be trained on the Chancellor Jeremy Hunt on Wednesday as he prepares to lay out the government’s spending plans in the autumn statement.
Many had expected Hunt to keep his tax-cutting scythe in its sheath until the budget in the Spring to win as much political capital as possible ahead of an election. But more suggestive noises have already begun to emerge from government.
Yesterday, Rishi Sunak laid out a fresh five pledges including cutting tax and backing British businesses. The time has come for tax cuts after inflation fell more sharply than expected last month, Sunak said.
An extension of the full expensing regime has already been trailed, alongside a potential shake-up to the ISA regime which will look to boost the flow of cash into the equity markets.
Moves are also expected to try and ease the flow of cash from pension funds into the market after a slide in equity holdings over the past two decades.
It paints a potentially rosy picture for City chiefs ahead of Wednesday. But what do they actually want?
David Schwimmer, London Stock Exchange Group
Schwimmer told reporters on Friday that boosting the flow of pension money into the market was near the top of his wishlist for the autumn statement.
“One [point] is recognition that the UK pension sector is the second largest pension sector in the world and yet it is significantly underweight in terms of its exposure to equities broadly – which I think is a real issue for pensioners -[…] but also significantly underweight exposure to UK equities,” he said when asked by City A.M.
“They’re getting lower returns from fixed income investment, but also significantly underweight exposure to UK. The pension community should be benefiting from the higher returns. And I think it’s important for the retail community to have access in a healthy way to equities.”
Mark Austin, partner at Latham & Watkins and capital markets specialist
Austin, who has masterminded a number of deepdives into the UK’s capital markets, similarly told City A.M. the autumn statement needed to focus on driving “more liquidity back into UK equities”.
“By continuing the process of pension reform, driving financial literacy, access to advice and access to products the government can boost the ability of retail investors to access and use the stock market for wealth generation,” he added.
“And where necessary, the government should not be afraid to exhibit and encourage UK home bias to drive investment in UK markets, as other jurisdictions do too.”
Romi Savova, PensionBee
Savova, chief and founder of feted fintech PensionBee told City A.M. her central concern was whether the Chancellor can “deliver a budget to drive growth” for tech and digital firms.
“Growth demands incentivisation, and the real test lies in stimulating personal and business investment in the UK economy, especially given the limitations on providing tax cuts to consumers,” she added.
“The key is to encourage and incentivise, rather than mandate. As discussions centre on tax incentives for manufacturing, there is a notable gap for the technology and digital sectors.”
The challenge for the chancellor, she added, was to “weave a strategy that not only propels the economy forward but also nurtures the UK’s digital economy to grow.”
James Ashton, Quoted Companies Alliance
For the Quoted Companies Alliance, shoring up the City’s standing as a listing venue should be front and centre for the Chancellor. A survey by the group casts a gloomy view of the market in the current environment – 25 per cent of its members said yesterday they see no benefit from their London listing.
“It’s vital the Chancellor shores up London’s attractiveness as a listing venue. Our members tell us it has not been this hard to raise funds via the public markets for more than a decade,” chief James Ashton, told City A.M.
“We must channel capital where it is most needed through ISA reform and getting absentee UK pension funds to back Britain.
“Ditch punitive stamp duty on share trading, extend and widen the EIS and VCT regimes and dig deep to fund more equity research so that exciting new ventures can be discovered by investors.”