UK government acting ‘too slow’ on growth agenda, says City boss
While Tim Levene is supportive of the government’s growth agenda, the fintech boss feels things are moving too slowly for the City to be hopeful of a boost to equity markets anytime soon.
The CEO of Augmentum Fintech said he has already met Chancellor Rachel Reeves three times since the election, including attending the government’s recent Investment Summit.
“What I can’t criticise is their engagement with business, the door is really open, much more so than the previous government,” he told City PM.
Levene also praised some of the steps that the government has rolled out to boost growth and investment in the UK, such as the “low hanging fruit” of local government pension scheme consolidation.
The plan, announced at Reeves’ inaugural Mansion House speech last year, would combine 86 different local government pension schemes managing assets between £300m and £30bn into a handful of ‘megafunds’.
However, Levene warned that “the pace of implementation is way too slow” on these growth-boosting measures.
“I’m optimistic that the money will flow to places where it hasn’t played before,” he said.
“That will really create and stimulate innovation in the country. But I’m not optimistic at the pace of change and timeline, and I think that could be the biggest single barrier, and we can’t afford to wait.”
In 1997, 53 per cent of all UK pension assets were allocated to UK equities. Now, the figure stands at just 4.4 per cent.
Analysts have frequently pointed to the capital flight from pension funds as a key reason for the underperformance of the FTSE 100 and UK growth assets compared to international equivalents.
“There’s not a lack of liquidity? Bulls**t,” said Levene. “Of course there’s a lack of liquidity. We need a really vibrant market, which requires overseas investors and domestic investors supporting the domestic market.”
However, Levene was still hopeful that the government might be able to fulfil its promises on growth, just a little slower than expected. Policies like removing ISA status from cash that have been rumoured to be considered by the government would help in that, he said.
“I think there’s a real incentive to start getting capital flowing in the next 12 months so they can point to real, tangible progress” at the next election, he explained.
Levene also noted that much of the slowdown was outside of the government’s control, with local government pension schemes similarly dragging their heels on change.