Market Update 10th November 2025

What can a Swedish speed camera do that Rachel Reeves can’t?

This week’s title may sound like the start of an Ian Hislop’s set up line on series one million of ‘Have I Got News For You?’ But the answer is not a tortuous joke at the chancellor’s expense. The answer I have in mind is not, anyway.

The rather left-field reference to our Scandinavian friends’ approach to highway management probably needs explaining. Most systems act punitively on those that exceed the speed limit in the form of issuing speeding tickets. Go too fast, pay a fine. This 100% stick, 0% carrot approach is all too familiar.

Before I start sounding like Jeremy Clarkson, I should say I don’t mind speed cameras. They save children’s lives. And that, as the Swedes managed to remember, is the object of the exercise. Which brings us to a rather interesting experiment in 2010. Stockholm tinkered with the traditional approach to speed management by introducing the carrot of a reward. Or at least the potential for a reward.

Go slowly enough, and your vehicle was entered into a raffle for a share of the prize – which was funded by the fines the cameras generated. Average speed dropped by 22%.

One of the lessons is that sometimes, to get a better outcome, you need to think about people’s motives, and the balance between carrot and stick. Wouldn’t it be nice to see some policies that encourage growth and innovation in the budget? The reason the US has spawned some of the world’s leading companies is its entrepreneurial culture.

Leaders constantly say they want the UK to be present at the top table. One of the sectors where British businesses are globally relevant is financial services. You may say that asking for my opinion here is a bit like asking the barber if you need a haircut, but to be fair it is the most important sector to our economy.

London’s strength is waning as a result of too much stick and not enough carrot. The best British businesses and ideas do not come through to market in the same way they do in the US. In part because would-be IPOs are being gobbled up by outside investors, the number of listed businesses is shrinking, not expanding. The approach to tax is also playing a part, and hurts our companies from top to bottom. Benefits and breaks to smaller businesses have been removed, the big banks still pay an extra levy. If the goal is to have a healthy and thriving financial sector, why have successive chancellors (this is not a comment aimed at one party) treated it as a pinata to smack, every time a bit of coin is needed?

The answer to that semi-rhetorical question is that, to paraphrase the infamous note left to the then-incoming Conservative government in 2010, the same year as that speed camera experiment, ‘there’s no money left’. The chancellor just can’t throw around incentives and giveaways. The interest on our government debt is set to clear £100bn a year, and borrowing more is not really appealing given the bond and currency markets’ reaction to the Kwarteng-Truss budget of 2022. That episode will live long in the memory. Especially mine. I was in New York at the time, and I honestly think I may have been mentally scarred by the dent that even simple things such as the price of bagels made in my bank balance as a result of Sterling’s weakness. I don’t think I’ve bought one since.

Given the challenges, it is no surprise that “tough choices” is the first thing I’ll be scribbling on my 2025 Budget bingo card. In practical terms, taxes could rise, and existing giveaways could be reappraised.

To end on a positive, something else that needs reappraising is the perceived link between the UK’s fortunes (fiscal or otherwise) and the domestic stock market indices. While the UK economy and fiscal position is hamstrung by domestic woes, the market has performed extremely well over 2025. Its returns have even outpaced the tech-powered US index. While we think the UK is still fairly good value, please remember that such a showing is not guaranteed to reoccur.

We will be attentive to any “rabbits from the hat” on the 26th (another for the bingo card) but would like to remind investors that the budget is rarely a defining moment for markets.

George Salmon – Senior Research Analyst

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