LONDON, Nov 14, 2024 (BSS/AFP) - Britain's Labour government plans reforms to its financial sector in a bid to grow its economy, including an announcement Thursday that will allow greater risk-taking.

Finance minister Rachel Reeves will outline the plans in her first Mansion House speech -- an annual address by the chancellor of the exchequer to business leaders due Thursday.

Late Wednesday she already announced plans to create mega pension funds, potentially boosting investment in the country by around o80 billion ($104 billion) in a move mirroring schemes in Australia and Canada.

Reeves will use her Mansion House address to say that measures brought in since the 2008 global financial crisis to "eliminate risk" have had "unintended consequences" in holding back growth.

"While it was right that successive governments made regulatory changes after the global financial crisis to ensure that regulation kept pace with the global economy of the time, it is important that we learn the lessons of the past," she will say according to extracts of her speech released to media.

"These changes have resulted in a system which sought to eliminate risk-taking. That has gone too far and, in places, it has had unintended consequences which we must now address."

Reeves will announce plans to "modernise" the Financial Ombudsman Service, which deals with complaints between consumers and firms.

A pilot scheme will meanwhile be launched to deliver digital bonds, embracing technology used by the cryptocurrency sector.
- Pensions reform -

Labour's "megafunds" pensions plan could unlock vast sums "for infrastructure projects and businesses of the future", the Treasury said.

Labour, whose general election win in July resulted in party leader Keir Starmer becoming prime minister, aims to pool assets of 86 local-government pension schemes in England and Wales.

The Treasury added that together the schemes were on course to manage o500 billion in assets by 2030.

The government plans also to consolidate workers' defined contribution schemes, a common form of pension.

"These megafunds mirror set-ups in Australia and Canada, where pension funds take advantage of size to invest in assets that have higher growth potential," the Treasury said.

The announcement comes after Reeves hiked business taxes and government borrowing in her maiden budget at the end of October.

"Last month's budget fixed the foundations to restore economic stability and put our public services on a firmer footing," Reeves said in comments alongside the pensions announcement.

"Now, we're going for growth. That starts with the biggest set of reforms to the pensions market in decades to unlock tens of billions of pounds of investment in business and infrastructure."

She added that the reforms would also "boost people's savings in retirement and drive economic growth".

Some analysts urged caution over the pensions shakeup.

"The government's hope will be... economies of scale," noted Tom Selby, director of public policy at investment platform AJ Bell.

He added that "conflating a government goal of driving investment in the UK and people's retirement outcomes brings a danger".

"If it goes well, everyone can celebrate. But it's clearly possible that it will go the other way, so there needs to be some caution in this push to use other people's money to drive economic growth."