18 January 2021

FT: City of London bosses warn against post-Brexit deregulation

City of London bosses have urged the UK government to tread carefully after it promised sweeping post-Brexit deregulation, arguing that the focus instead should be on creating new flexible rules to support growing areas of the economy.

Chancellor Rishi Sunak said last week that the City could expect something akin to a “Big Bang 2.0” — harking back to the Thatcherite deregulation of the financial services industry. The chancellor’s promise came after prime minister Boris Johnson asked 250 executives for ideas to cut regulatory and legislative burdens. The government is also considering a post-Brexit overhaul of UK labour markets.

The FT’s City Network — which brings together more than 50 of the City’s top figures in finance and policymaking — told the FT it was focusing on areas including tax and pensions reform, access to skilled workers, regulations to encourage growth of industries such as green finance, life sciences and fintech as well as support for changes to the UK’s listing regime. But business chiefs say there is little need for wholesale deregulation in the UK.

Anne Richards, chief executive of Fidelity International, said the government should focus on “re-regulation” — reshaping regulation in response to the post-pandemic environment — rather than deregulation, “with the aim of creating a financial universe fit for the 21st century”. “The UK did a superb job of getting its voice heard on the regulatory debate in the EU,” said Miles Celic, chief executive of TheCityUK, which represents financial services companies. “As such, it’s not a surprise that the UK industry is broadly content with the regulation that we’ve just onshored — the UK was, after all, the main architect.”

The call for ideas by Mr Johnson was taken by many as a sign of thawing relations between business leaders and Downing Street. One senior banking executive said it had been great to hear such “upbeat and gung-ho” talk from ministers after feeling excluded from policymaking because of the opposition of many in the City to Brexit. The prime minister has convened a new business council with some of the UK's largest companies that will meet quarterly, starting today.

Kwasi Kwarteng, who was appointed business secretary this month, has promised to work closely with businesses. “I definitely sense a change in tone. We are seeing better traction,” said the banker. But he added: “What does it mean in practice? Instead of looking backwards, we need to look forwards.”....

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