UK consumers used to save very little — now they’re saving a lot, perhaps too much. Why? Kallum Pickering, Peel Hunt chief economist, joins host Merryn Somerset Webb to explain. He points to a “wealth shock”: when gilt yields surged in 2022, pension values fell sharply. At the same time, mortgage rates climbed and house prices stalled.

This shift matters. It’s one reason the UK economy remains sluggish. But it’s not the only factor — our strained public finances and the sheer size of the state also play a role.

Can it be fixed? Kallum thinks so. He shared his long-term ideas for turning things around — and even offered a few suggestions for Chancellor Rachel Reeves.

Correction: At the end when Kallum discusses financing pensions, he refers to a policy that includes a one-year tax cut for young people at £2,000. That is incorrect. His calculations account for £2,000 cuts for years one and two for pensions, and £1,000 cut in healthcare. It starts for everyone at age 20 but anyone under 40 would get the chance to partake. 

UK consumers used to save very little &mdash; now they&rsquo;re saving a lot, perhaps too much. Why? Kallum Pickering, Peel Hunt chief economist, joins host Merryn Somerset Webb to explain. He points to a &ldquo;wealth shock&rdquo;: when gilt yields surged in 2022, pension values fell sharply. At the same time, mortgage rates climbed and house prices stalled.
This shift matters. It&rsquo;s one reason the UK economy remains sluggish. But it&rsquo;s not the only factor &mdash; our strained public finances and the sheer size of the state also play a role.
Can it be fixed? Kallum thinks so. He shared his long-term ideas for turning things around &mdash; and even offered a few suggestions for Chancellor Rachel Reeves.
Correction: At the end when Kallum discusses financing pensions, he refers to a policy that includes a one-year tax cut for young people at &pound;2,000. That is incorrect. His calculations account for &pound;2,000 cuts for years one and two for pensions, and &pound;1,000 cut in healthcare. It starts for everyone at age 20 but anyone under 40 would get the chance to partake.&nbsp;

Merryn Talks Money with Bloomberg senior columnist Merryn Somerset Webb is your key to understanding how markets work – and how you can make them work for you. Every episode features a relaxed but in-depth conversation with a fund manager, a strategist, a Bloomberg expert or just someone Merryn finds particularly interesting in any given week. Listen in for the kind of insights and explanations everyone can use to help them make better saving and investing choices.

Merryn Talks Money with Bloomberg senior columnist Merryn Somerset Webb is your key to understanding how markets work – and how you can make them work for you. Every episode features a relaxed but in-depth conversation with a fund manager, a strategist, a Bloomberg expert or just someone Merryn finds particularly interesting in any given week. Listen in for the kind of insights and explanations everyone can use to help them make better saving and investing choices.

Merryn Talks Money

The UK Government Must Cut Spending - Here's Why (with Kallum Pickering)

https://api.omny.fm/orgs/e73c998e-6e60-432f-8610-ae210140c5b1/clips/5ad26ce8-f327-4f39-8b85-b39f00a46fd4/transcript