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. 

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