Merryn Talks Money The UK Government Must Cut Spending - Here's Why (with Kallum Pickering)
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Nov 24, 2025 Kallum Pickering, Chief Economist at Peel Hunt, dives into the UK's economic challenges, highlighting a recent 'wealth shock' that has drastically altered household savings habits. He discusses how rising gilt yields and stagnant property values are contributing to sluggish growth. Kallum outlines potential fiscal policy solutions, including a commitment to sound money and the necessity of cutting government spending over increasing taxes. He also emphasizes the importance of revitalizing private investment to spur economic recovery.
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Growth Is Moderate But Missing Cycles
- UK growth around 1.6–1.7% is not stagnation but lacks cyclical investment-led momentum.
- Kallum Pickering says high benchmark yields crowd out interest-sensitive private investment, hurting cyclical sectors.
Savings Jump From A Wealth Shock
- UK household savings roughly doubled since 2022 mainly because household net wealth collapsed.
- Pickering links the savings rise to a trillion-pound fall in net worth driven by pension and asset-price shocks, not just uncertainty.
Markets Penalise Damaged Fiscal Credibility
- UK 10-year yields sit around 4.5%, roughly 100bp above where they should be relative to peers.
- Pickering argues October 2022's market wobble destroyed fiscal credibility and kept yields elevated, pressuring asset prices and mortgages.