City joy as Brexit allows rule book to be rewritten but Chancellor Jeremy Hunt insists this is not Big Bang 2.0
- Jeremy Hunt has unveiled a series of reforms designed to boost the City’s role
- Changes are no longer being described as a ‘Big Bang 2.0’
- Hunt said more soberly-titled Edinburgh Reforms will ‘seize on Brexit freedoms
Jeremy Hunt has unveiled a series of reforms designed to boost the City’s role as a global financial centre, partly by scrapping rules put in place when Britain was still in the EU.
The Chancellor said they would help secure the UK’s status ‘as one of the most open, dynamic and competitive financial services hubs in the world’.
But the changes are no longer being described as a ‘Big Bang 2.0’ – the tag given by Hunt’s predecessor Kwasi Kwarteng to his plans for a bonfire of regulations. Instead, Hunt said, the more soberly-titled Edinburgh Reforms will ‘seize on our Brexit freedoms to deliver an agile and home-grown regulatory regime that works in the interest of British people and our businesses’.
Brexit freedoms: Jeremy Hunt has unveiled a series of reforms designed to boost the City’s role as a global financial centre
The changes include a review of rules put in place after the financial crisis to make senior bankers more accountable for their decisions.
They will also water down ‘ringfencing’ regulations that were designed to shield High Street banks from lenders’ riskier investment arms. Hunt said it would be wrong to describe the 30 measures as a ‘Big Bang’, a reference to Mrs Thatcher’s original deregulation of the stock market in the 1980s.
He told an online event hosted by the Financial Times: ‘We have to make sure that we do not unlearn the lessons of 2008, but at the same time recognise that banks today have much stronger balance sheets, and we have a much stronger resolution system if things do go wrong.
‘In that context, it is perfectly sensible to make pragmatic changes such as the ones we are announcing today. But we are doing so very, very carefully to make sure that the UK is competitive, exciting – the place to be and the place to invest, but also that we don’t lose the guardrails that were put in place after 2008.’
Hunt set out the changes in Edinburgh, after which the package was named, throwing a spotlight on the fact that Scotland’s capital is among a number of key locations outside the City of London that benefit from being part of the UK financial services industry.
The Treasury cited figures showing the sector contributes £216billion a year to the UK economy. But the emphasis appears to be on tweaking rules rather than discarding international standards and throwing out regulations altogether.
Some feared that too-drastic action risked forcing costly changes to their systems and damaging trading relationships around the world.
The reforms include implementing recommendations from a review in 2021 designed to boost participation in the stock market, simplify the process for companies to raise money on capital markets, and make the UK a more attractive destination for listings.
Other moves include repealing and reforming rules brought in when Britain still belonged to the EU. Labour accused the Government of a ‘race to the bottom’.
But The City UK, a trade body, said it was a ‘helpful and incremental set of reforms rather than a complete overhaul of how the market works’. And Stephen Bird, chief executive of asset manager Abrdn, said: ‘We welcome today’s announcement with its clear focus on competitiveness and future success of the UK financial services sector.’