Autumn Statement: Key announcements from Jeremy Hunt
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Jeremy Hunt is set to tear up a swathe of “overbearing” EU rules to boost the City post-Brexit. The move is part of an attempt to boost Britain’s financial services industry after Brexit. Speaking today in Edinburgh, the Chancellor will announce a package of reforms, centred around increasing the City of London’s competitiveness.
The reforms will see the treasury relax ring-fencing rules on smaller banks and mandate financial regulators to focus on economic growth as well as consumer protection.
The “Edinburgh Reforms” are a step back from the initial plans, which were previously dubbed “Big Bang 2.0” – a mark of Mr Hunt distancing himself from the more radical proposals planned by his predecessor Kwasi Kwarteng.
The original title of the reforms was an echo of Margaret Thatcher’s deregulation of the Square Mile in the mid-1980s.
The reforms are part of an attempt to seize post-Brexit freedoms and boost the city’s competitiveness, with the Chancellor saying that leaving the EU is a “golden opportunity” to “unleash the full potential of our formidable financial services sector”.
Ring-fencing requires banks to separate their retail banking services from their investment and international banking activities and was introduced as a response to the financial crisis.
While the UK’s biggest lenders will still be required to adhere to ring-fencing requirements, several smaller banks, such as Santander UK, Virgin Money and TSB Bank, will likely be exempt.
The changes could also include a review of the Mifid 2 rulebook – regulation around financial research – as well as deregulation of trading rules to boost flexibility for investors.
The Treasury also said rules that “hold back growth will be reviewed, with overbearing EU rules which put companies off listing in the UK being overhauled”.
Announcing the reforms, Mr Hunt said: “This country’s financial services sector is the powerhouse of the British economy, driving innovation, growth and prosperity across the country.
“Leaving the EU gives us a golden opportunity to reshape our regulatory regime and unleash the full potential of our formidable financial services sector.
“Today we are delivering an agile, proportionate and home-grown regulatory regime which will unlock investment across our economy to deliver jobs and opportunity for the British people.”
The plans come in the wake of Mr Hunt’s Autumn Statement, which saw the Treasury unveil a swathe of tax rises and spending cuts, taking taxes to their highest level since World War 2.
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One of Britain’s biggest business groups warned that Mr Hunt’s tax raid has had a “chilling effect” on the economy and risks damaging the UK’s competitiveness.
Alex Veitch, the British Chambers of Commerce’s director of policy, said: ”Business confidence has been falling for months. It is now clear that the September mini-Budget and Autumn Statement have had a further chilling effect.
“Very few firms will be willing to invest as they face a wall of higher prices, interest rates and taxes.
“The very real worry is that the UK will get left behind by our competitors, once the economy emerges from recession, as growth remains so weak.”
The Chancellor and City Minister Andrew Griffith will meet with City chief executives today to discuss the reforms and examine how the financial services sector can further drive investment and economic growth.
Simon Morris, a financial services partner at City law firm CMS, welcomed the reforms but said: “Headline reforms are only half the story, and the City needs continued stability to thrive.
“Government and regulators have promised to maintain world-class regulation with no bonfire-lit race to the bottom – this is greatly assuring. [But] the second element is more challenging, and the Government cannot optimise its regulatory reforms without the UK first re-establishing its reputation as a fiscally stable jurisdiction.”
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