12 Jul Chancellor announces plans to place the UK as leading contender for the next Silicon Valley
Amidst an increasingly challenging economic situation in the UK, following reports of inflation reaching record highs with the unexpected increase of interest rates to 5%, startups and SMEs have taken a significant blow. According to City Monitor, there were more than 105,000 UK business closures in the first quarter of 2023, while just 79,000 new businesses were created, the largest net decrease on record – this can widely be attributed to the lack of start-up capital and funding being deployed in the market.
Due to this, the UK experienced the weakest GDP growth out of the entire G7, as reported in Reuters. However, a new beam of light glimmers following reports that Chancellor, Jeremy Hunt, is exploring changes to pension fund allocations in order to promote small businesses in the country. He is set to outline plans in order to merge workplace pension schemes and release up to £75 billion of retirement funds for fast-growing companies, particularly in the fintech and biotech sectors. This news no doubt comes as a relief to any startups struggling to stay afloat in the current economic climate. Claire Trachet indicates this not only improves investor confidence and economic outlook but will have a tangible impact on the UK’s objectives towards becoming a global tech hub as frequently expressed by PM Rishi Sunak.
The government intends to merge pension plans in order to pool their resources and provide greater returns to pensioners. An agreement with nine large pension providers, mandating them to spend 5% of their retirement funds in private investments has been reached. The amendments aim to stimulate company investment, foster growth in promising UK firms, and potentially increase pension returns by 12% for average earners who start saving at the age of 18. Trachet highlights the timings of the announcement are more than opportune for the ruling party outlining steps to achieve the ultimate aim of making the UK the next Silicon Valley.
