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Rola Khaleda, FT editor, chooses her favorite stories in this weekly newsletter.
The writer is the governor of Tonbridge
For several centuries, this country supported an unannounced social contract. Each generation will create a better future for another. This deal is now broken. This is the result of decades of policy options that systematically benefited from one generation – children’s children – stimulates the economy at the beginning but suffocates it now as wealth is transferred from young to senior. Two bad policies in particular have affected this path. The first was a set of regulatory changes two decades ago, which actually included retirement funds to liquidate their investments in the United Kingdom companies and replace them with government bonds.
This decision destroyed the basic social contract that causes pensions to work: the idea that the old profit is of youth energy. Instead of fueling minds and living ideas, wealth was directed to the state’s hand through Gilts. Today, more than 60 percent of the assets of the private segment pensions in Gilts exceed 1 percent in the UK stocks. This British institution has starved from the long -term local capital, which prompted innovative companies such as ARM Holdings and DeepMind to search for foreign investments, and rid the wealth it creates abroad.
Second, and more harmful to young generations, is a group of policies that have been artificially created artificially destroyed. For decades, very few homes were built in the UK. Partially thanks to the tax system, housing has been transferred from a place to live and raise the family into a tax -free retirement box in fact excludes young people. More than 56 percent of the total housing wealth in the UK is owned by more than 60 years, while the ownership of homes is among those under the age of 35 Collapse To only 6 percent. This has had deep social and economic consequences as a number of people marry and have children, which weakens a long -term demographic renewal. The result? More than 80 percent of the individual’s real wealth over the past thirty years has come from real estate estimate, and not from the financial investment that occupies the economy.
Michael Toure, co -founder of Oondra Partners Argue This is the poor customization of the capital has created a self -enhancement cycle, which weakens our national and economic security. Without productive capital, we are totally dependent on foreign investment and imported workers, and the supply of housing and public services. These abnormalities can only be corrected by re -allocating the national capital that places the long -term national interest over the narrow electoral account. This means settling the investment stadium to reduce taxes on those who use the long -term savings and investments in the future of Britain and generate growth. Besides building more homes and totally more migration controls, this would lead to access to young generations.
Leaving the property as the only lifelong capital exemption has distorted the allocation of capital in the United Kingdom. The relief for private residency, which exempts the initial housing from taxes and its costs by the Ministry of Treasury with more than 30 billion pounds in the tax year 2023-24, is no longer sacred. PRR can enable the wholesale we need, including exempting lifelong capital gains for investments in British companies, eliminating stamping fees for stock transactions and raising the contribution of ISA that supports the UK company. This would motivate British families to invest in companies instead of buildings.
Finally, the retirement system requires a basic reform. Directing more of our nation’s savings to operate companies in the United Kingdom, technology and businessmen will enhance the industrial renaissance that our economy requires and generate better long -term returns for retirees as well. Many of this will not be common. The current system serves many acquired interests. But if we want the economy to grow, we will not be able to defend frozen origins; The future of the country is at stake.
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