Chelsea Financial Services has unveiled a four-point plan it believes will supercharge the UK economy.
The economy has lost £140 billion since Brexit, tarnishing London’s status as a global financial hub, the firm said.
To get it back on track, Chelsea Financial Services believes whichever party wins the general election next month should redirect pension fund investments towards UK equities, cut red tape for businesses, supercharge investment through Venture Capital Trusts and scrap stamp duty for UK smaller companies.
The firm said: “We believe these policies represent a bold vision for a prosperous UK. This is not just about economic growth, it is about building a resilient, innovative and dynamic UK. It is also a potential future where businesses are empowered to drive growth.”
Chelsea Financial Services said UK pension funds’ exposure to UK equities has dwindled over the past 25 years, with figures from New Financial think tank estimating that the share of UK stock market owned by UK pensions and insurance companies has fallen from 39% to 4%.
“The Chancellor needs to encourage pension funds to deploy more of their capital in a way that boosts Britain’s economy. While US equities power on, the unloved UK stock market continues to lag, Institutions managing retirement money have been moving their investments away from UK stocks. We’d like pension managers to put more money into UK companies and the government to drive an investment target,” the firm said.
It has also called upon the new government to boost investment in British companies through VCTs by enhancing the incentives on offer, including increasing tax reliefs and raising funding limits for VCT-eligible investments.
“Investing in VCTs will foster a collaborative ecosystem where established businesses support the growth of emerging industries. This symbiotic relationship will drive innovation and economic dynamism. If we want to encourage Britons to take risk they need to be given the appropriate incentives.”
Furthermore, Chelsea Financial Services has said the economy is being stifled by “entirely unnecessary red tape,” which is hindering innovation and competitiveness. Regulation, while intended to promote transparency, has often led to significant administrative costs and complexities that deter investment, the firm warned. It said that Britain’s investment trusts may move their listings to Switzerland to avoid the onerous EU rules over cost disclosure. Currently, asset managers must ‘double count’ and disclose investment trust costs as part of their own costs, making trusts appear more expensive.
“This not only increases operational costs but also diminishes investor confidence and discourages the establishment of new trusts. More widely, we need to reduce paperwork, expedite approval processes and create a legal framework that supports, rather than hinders, business activities. By embracing digital solutions for regulatory compliance, we can make these processes more efficient and less burdensome,” they said.
Finally, Chelsea Financial Services has called for the government to scrap stamp duty for small companies, stating that it would be an easy way to make the UK market more competitive and a change that could be implemented quickly.
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