LABOUR's flagship deal with pension funds risks making the UK economy more like China, the boss of Lloyds Banking Group has warned after its subsidiary Scottish Widows chose not to sign up to the agreement.

Chancellor Rachel Reeves won the support of 17 pension funds which agreed to invest at least five per cent of assets in the UK by 2030 under the Mansion House Accord, which gives the government powers to force investment in domestic assets.

But Charlie Nunn, the chief executive of Lloyds Banking Group, which owns the major pension fund Scottish Widows, has said the government's threat of mandation would undermine fiduciary legal obligations to find the best returns of savers.

"Mandating allocations of pension funds is a form of capital control, " Nunn told the Financial Times.

"I have spent 10 years of my working life in China and many jurisdictions where there are capital controls. That is a different model and that is a difficult slope for an economy that believes it is an open economy."

Nunn, who pointed out Lloyds had £35bn allocated towards investment in British assets, suggested the government should focus on housing in order to drive growth in the UK economy, with too much focus put into adjustments around savings over real problems.

(c) 2025 City A.M., source Newspaper