84% of young people get no financial education. That's not the real problem

Financial advisers need it more.

The Chartered Institute for Securities and Investment (CISI) said yesterday that it supported a private member's bill introduced by Thomas Docherty MP to include financial literacy in the national curriculum.

A study in July found that 84 per cent of young people aged 18-25 hadn't received any formal financial education. But it would be interesting to find out how formal financial education affects decision-making: if young people understand basic financial concepts, from inflation and interest rates, to stocks and shares, or how banks operate, will they be less likely to take out payday loans, max out their credit cards or take out unaffordable mortgages? 

You could easily argue that financial training didn't prevent bankers from excessive risk taking. Then again, until this year, financial advisers weren't required to hold more than the equivalent of an A-level in finance.

I remember once speaking to Christopher Jones-Warner, who teaches communication to wealth managers. He said that at his training sessions for financial services personnel he asks attendees to raise their hands if they"have a financial plan" are "working that financial plan" and therefore "expect to retire comfortably." He estimates only around 22 per cent of his audience raise their hands. If professionals aren't planning their finances sensibly, what hope is there for the rest of us?

This makes me wonder, perhaps the problem isn't one of formal financial education, but something more informal and more difficult to teach in a classroom— a question of ethos. It seems to me that it's more important that people are less reckless when it comes to taking on debt, than that they can tell an examiner what a derivative is.

This article first appear on Spear's.

Drive for financial literacy. Photograph: Getty Images

Sophie McBain is a freelance writer based in Cairo. She was previously an assistant editor at the New Statesman.

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Theresa May gambles that the EU will blink first

In her Brexit speech, the Prime Minister raised the stakes by declaring that "no deal for Britain is better than a bad deal for Britain". 

It was at Lancaster House in 1988 that Margaret Thatcher delivered a speech heralding British membership of the single market. Twenty eight years later, at the same venue, Theresa May confirmed the UK’s retreat.

As had been clear ever since her Brexit speech in October, May recognises that her primary objective of controlling immigration is incompatible with continued membership. Inside the single market, she noted, the UK would still have to accept free movement and the rulings of the European Court of Justice (ECJ). “It would to all intents and purposes mean not leaving the EU at all,” May surmised.

The Prime Minister also confirmed, as anticipated, that the UK would no longer remain a full member of the Customs Union. “We want to get out into the wider world, to trade and do business all around the globe,” May declared.

But she also recognises that a substantial proportion of this will continue to be with Europe (the destination for half of current UK exports). Her ambition, she declared, was “a new, comprehensive, bold and ambitious Free Trade Agreement”. May added that she wanted either “a completely new customs agreement” or associate membership of the Customs Union.

Though the Prime Minister has long ruled out free movement and the acceptance of ECJ jurisdiction, she has not pledged to end budget contributions. But in her speech she diminished this potential concession, warning that the days when the UK provided “vast” amounts were over.

Having signalled what she wanted to take from the EU, what did May have to give? She struck a notably more conciliatory tone, emphasising that it was “overwhelmingly and compellingly in Britain’s national interest that the EU should succeed”. The day after Donald Trump gleefully predicted the institution’s demise, her words were in marked contrast to those of the president-elect.

In an age of Isis and Russian revanchism, May also emphasised the UK’s “unique intelligence capabilities” which would help to keep “people in Europe safe from terrorism”. She added: “At a time when there is growing concern about European security, Britain’s servicemen and women, based in European countries including Estonia, Poland and Romania, will continue to do their duty. We are leaving the European Union, but we are not leaving Europe.”

The EU’s defining political objective is to ensure that others do not follow the UK out of the club. The rise of nationalists such as Marine Le Pen, Alternative für Deutschland and the Dutch Partij voor de Vrijheid (Party for Freedom) has made Europe less, rather than more, amenable to British demands. In this hazardous climate, the UK cannot be seen to enjoy a cost-free Brexit.

May’s wager is that the price will not be excessive. She warned that a “punitive deal that punishes Britain” would be “an act of calamitous self-harm”. But as Greece can testify, economic self-interest does not always trump politics.

Unlike David Cameron, however, who merely stated that he “ruled nothing out” during his EU renegotiation, May signalled that she was prepared to walk away. “No deal for Britain is better than a bad deal for Britain,” she declared. Such an outcome would prove economically calamitous for the UK, forcing it to accept punitively high tariffs. But in this face-off, May’s gamble is that Brussels will blink first.

George Eaton is political editor of the New Statesman.