mansion house speech – uk government's campaign for growth

On Tuesday, Chancellor Rachel Reeves announced plans to eradicate red tape that she deems has a stronghold on the UK economy and to transform typical savers into long-term investors. 

Banking regulation reform

Financial services is one of the largest sectors in the UK. However, since the financial crisis in 2008, regulations have created a significantly cautious environment on how banks allocate capital.

Reeves plans to reform ringfencing regulation which should provide banks with more flexible use of their capital.

Investment campaign

Another significant announcement is the government’s campaign to encourage investing. A widely anticipated change ahead of the speech was a possible cash ISA allowance shake up. However, this was paused the week prior due to demand for further consulting with the banking industry.

Instead, a campaign will be rolled out, encouraging the retail audience to begin their investment journey. Given the UK population’s risk appetite towards investing being outweighed by their preference for lower-risk savings accounts, the campaign is a bid to highlight the benefits of investing to those with significant cash reserves saving for the long term.

Our view

Economic stimulus and regulation

• The government is ramping up its tactics to stimulate the economy after GDP contracted for the past two months.
• Reduction in bank regulation has the potential to free up capital for banks which could be positive for growth.

Change to risk appetite

• Roughly a quarter of the UK invest in stocks and shares as of 2025, according to Finder. This figure is significantly lower than its global counterparts with more than 60% of the US population investing. Drivers for this may include attractive interest rates, economic uncertainty and challenging housing affordability. Changing attitudes to investing is not an easy task but there are success stories in other developed markets.
• Improved adoption of investing into UK assets could help build customers’ future returns as stock markets tend to outperform savings over the long term. Therefore, consumers could grow their wealth further and reduce their reliance on a state pension when it comes to retirement.
• Better returns on savings could support spending and increase capital available to businesses leading to investment and productivity growth.
• While Reeves didn’t announce any changes to ISA allowances or pension funds, she did say she reserves the ability to make amends in the future.

UK interest rates

• The UK economy has several headwinds to navigate which could influence the Bank of England’s roadmap for lowering interest rates in the remainder of 2025.
• Previously, expectations were for two interest rate cuts in the second half of the year. However, inflation for June came in above expectation at 3.6%, up from 3.4% in May.
• The central bank will need to strike a fine balance to ensure that the economy can return to growth whilst trying to avoid spiralling rising prices.

Past performance should not be taken as a guide to future performance. The value of investments, and the income from them, can fall as well as rise and you may not get back what you put in. You should continue to hold cash for your short-term needs. Any current tax reliefs referred to are those applying under current legislation which may change. The availability and value of any tax reliefs will depend on your individual circumstances.