MAGGIE PAGANO: City is golden goose that could be fattened for all

The Treasury was clever to choose Edinburgh for the launch of the biggest shakeup of the financial sector for decades, aimed at boosting the UK’s economy post-Brexit. 

It was equally smart to name the reform package after the city too, making the point without labouring it that Edinburgh is Britain’s second biggest financial hub.

It is too early to say whether the Edinburgh Reforms will prove to be the dynamo needed to turbocharge the City and, more importantly, the wider economy. 

They don’t go quite as far as the Big Bang 2.0 promised by Rishi Sunak, but there is certainly enough to get going with – 30 or more, ranging from proposals for a new digital currency to short-selling reforms. 

Although Chancellor Jeremy Hunt hailed his package as a post-Brexit boost, some of the rules could have been changed even if we had stayed in the EU. Ironically, we tended to be the ones who set the gold-standard for most of the rules anyway. 

More interestingly, the EU is also reviewing similar constraints. The more obvious point is that governments around the world – including the EU – are looking again at rules introduced after the 2008 Great Financial Crash. Some are no longer appropriate and need updating. 

That’s why some of the rules around the more arduous senior managers’ regime – which holds bosses personally and financially responsible for problems that occur on their watch – are being relaxed, as are ring-fencing regulations intended to protect retail customers by separating their deposits from riskier investment banking operations. These changes make sense, as they are being relaxed for banks which don’t have investment banking divisions. 

Among the most significant reforms are those to repeal and replace Solvency II – the rules governing insurers’ balance sheets. This is expected to unlock over £100billion of private funds for insurers to invest in more productive assets such as UK infrastructure. As it happens, the EU is also revisiting these rules. 

There are much-needed plans to improve London’s capital markets. 

Overhauling the prospectus and listing regime is a must to keep the public markets more competitive. So are the plans for a trading venue to help private companies have access to capital without full disclosure before they go for listing. 

Yet some commentators claim that Hunt is tearing up the rule book. They say the Treasury is introducing the same sort of light-touch regime they criticised Labour for and which deepened the impact of the financial crash. That would be unfair. 

Regulators are being asked to judge the international competitiveness of their actions in terms of the UK economy but not to sacrifice them against high standards. Nothing wrong with that. 

Reforms that improve access to the UK’s capital markets must be good for the country. Financial services contribute £216billion a year to the economy, including £76billion in tax revenue, and the sector employs 2.3m with 1.4m outside London. 

Whether you like it or not, the City is still the golden goose, and one which is plucked by the rest of the country. If these changes, which favour incumbents versus new entrants, are implemented, then the goose could indeed be fattened for all.

Treaty trick 

One of the saddest stories of the last few years was the death of Harry Dunn, killed by a hit-and-run driver, the American Anne Sacoolas. 

Despite admitting to the crime, she didn’t have to come here because of the UK’s lopsided extradition laws with the US. 

As Mike Lynch, on the brink of being extradited to the US to face criminal charges relating to the sale of his firm Autonomy to Hewlett-Packard, said on radio yesterday, the treaty is deeply unfair. 

It is one that gives a US prosecutor more power than your local bobby. 

More pertinently, a treaty designed to trap terrorists is now being used to weaponise all US interests. What a surprise. 

It should be changed. 

Win bonus 

The tension is too much to bear. It will be a miracle but it’s looking entirely possible that Gareth Southgate’s brilliant players may just about pull off a win against the equally magnificent French team tonight. He just needs to let his men loosen up a bit. 

No wonder retailers are reporting a big spike in beer and snacks sales. Let’s hope they don’t report a run on Kleenex tissues too. As the French say, merde.