The ‘British Recovery Bond’: Post-Covid economic saviour or rearranging deckchairs on the Titanic?

Tom Selby
18 February 2021

•    Labour leader Sir Keir Starmer has backed the creation of a ‘British Recovery Bond’ to help rebuild the UK economy post-Covid (https://labour.org.uk/press/starmer-sets-out-plan-to-give-british-people-a-stake-in-our-national-recovery/)
•    Details scant at this stage but reports suggest policy would be similar to National Savings & Investments (NS&I) bonds
•    Starmer says the bonds “could raise billions to invest in local communities, jobs and businesses” while also giving “millions of people a proper stake in Britain’s future”
•    However, any extra returns provided to savers via a bond would mean additional costs for the Exchequer

Tom Selby, senior analyst at AJ Bell, comments: 

“You can see the appeal of a ‘British Recovery Bond’ to a Labour Party attempting to establish its economic credentials under a relatively new leader. 

“On the face of it this policy ticks three key boxes for Sir Keir Starmer - boosting the funding available to rebuild the country post-Covid, providing a return to hard-working savers keen to play their part in the recovery, and with a dollop of patriotism thrown in for good measure.

“However, it is important to be realistic about what this could mean in reality. The creation of a ‘British Recovery Bond’ would not spin gold out of thin air – it is simply an alternative way of raising finance. 

“Furthermore, the more attractive the interest rate offered to savers, the worse the deal for UK taxpayers – the same people who would presumably be encouraged to buy the bonds.

“So while this policy has an obvious political attraction, in terms of addressing the £400 billion+ hole left in the country’s finances by the pandemic it feels like rearranging the deckchairs on the Titanic.”

Tom Selby
Director of Public Policy

Tom is director of public policy at AJ Bell. He is a prominent spokesperson on retirement issues and his views are regularly sought by national print and broadcast media. Tom has successfully campaigned for a number of consumer-focused reforms, including banning pensions cold-calling and increasing pensions allowances, and he is passionate about improving outcomes for savers and retirees. Tom joined AJ Bell as senior analyst in April 2016, having previously spent seven years as a financial journalist. He has a degree in Economics from Newcastle University.

Contact details

Mobile: 07702 858 234
Email: tom.selby@ajbell.co.uk

Follow us: