NOV 15, V7N- Britain's Labour government unveiled financial sector reforms aimed at boosting economic growth, including measures to encourage greater risk-taking. In her first Mansion House speech, Finance Minister Rachel Reeves highlighted the unintended consequences of post-2008 financial crisis regulations that limited risk-taking and stifled growth. She announced plans to modernize the Financial Ombudsman Service and launch a pilot for digital bonds inspired by cryptocurrency technology. Reeves also emphasized strengthening trade with global partners, including the United States under President-elect Donald Trump, and resetting ties with the European Union post-Brexit.

A centerpiece of the reforms is the creation of "megafund" pension schemes, pooling assets from 86 local government pension plans in England and Wales. The move, modeled after successful systems in Australia and Canada, could unlock £80 billion ($104 billion) for infrastructure and high-growth businesses. The government also plans to consolidate defined contribution schemes, aiming to boost retirement savings and channel investments into the economy. By 2030, these schemes are projected to manage £500 billion in assets.

Reeves framed the reforms as a follow-up to her maiden budget in October, which focused on stabilizing public finances. She stated that these measures mark the beginning of a growth-oriented agenda while aiming to secure higher returns for pension savers and drive investment in the UK economy.

However, analysts cautioned against potential risks in using pensions for economic growth. Tom Selby of AJ Bell noted that while economies of scale could benefit savers, linking pension outcomes to government growth objectives introduces risks. He urged a careful approach to avoid jeopardizing retirement savings.

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