Beware of unintended consequences of attack on global payments, says City boss MARK FITZPATRICK

I do not envy the Minister of Finance. Rachel Reeves has to walk a tightrope to deliver a budget on October 30 that supports the new Government’s agenda.

The fiscal situation is precarious, expectations around investment in parts of the public sector are high and taxes accounting for almost 75 Pension Raid: Speculation is growing that Chancellor Rachel Reeves will reduce the tax-free lump sum they can withdrawing savers from their pension funds from government income have been ruled out for changes.

The Government has tried to reassure by stating that changes to income tax, Social Security and VAT are ruled out, but making it clear to the country that difficult decisions will be made, that the Budget will probably be “painful” and that the impact will fall disproportionately on those with “broader shoulders.”

Therefore, speculation abounds about the remaining possible levers for increasing revenue. This is causing uncertainty and leading to changes in consumer behaviour, some of which may not be in their long-term interests.

At St James’s Place, we have seen clients trying to navigate the uncertainty, with some considering accelerating tax-free cash withdrawals from their pensions as Budget Day approaches.

However, we know that the risk of our clients taking action is likely lower than others in the industry because they have advisors available to help them avoid potentially harmful decisions.

But once the cash is withdrawn tax-free, very often the potential pension-related benefits are lost forever.

I know that financial advisors across the country will be ready to help you understand and manage any changes that are announced at the end of the month.

I urge each and every one of you to follow the advice available, ensuring that any changes to your personal finances receive a proportionate and sensible response rather than a hasty reaction.

Against a backdrop of shrinking UK stock markets and an outflow of money from UK-focused equity funds, and with the Government aiming to increase investment in British assets and growth, we should avoid doing anything that reduce investment even further.

This Government knows, better than anyone, that a growing economy is the only way to generate the scale of tax revenue needed to invest in the public sector.

It is for this reason that I would encourage the Chancellor and the teams at HMT (Treasury) and HMRC (Revenue and Customs) to carefully navigate the path towards 30 October.

With a challenging fiscal situation, I believe all of us who are privileged to be better off should expect to contribute more if our Government asks us to.

But the Chancellor will also know that tax increases must not have unintended harmful consequences, such as discouraging those who save for their pensions and invest in their long-term financial future.

Mark FitzPatrick is chief executive of wealth management firm St James’s Place.