Chancellor Rachel Reeves has reinforced the government’s stance on urging the UK’s financial regulators to actively promote the growth and competitiveness of the City of London.
Speaking during her North American tour, Reeves reiterated her support for the introduction of a secondary objective for the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
Reeves’ Focus on Regulatory Bodies
Reeves expressed concerns that the City’s regulatory bodies may not be fully committed to these objectives. She has been pressing regulators to clarify their actions in support of the secondary objective. “What are you doing in practice to meet that secondary objective?” she asked.
The FCA oversees nearly 50,000 UK businesses to ensure market competition and proper functioning of financial services. The PRA, a division of the Bank of England, supervises 1,500 financial firms. These bodies are at the centre of this regulatory push.
Strategic Review of Financial Services
Reeves is expected to elaborate on her strategy to revitalise the UK’s financial services sector in her first Mansion House speech later this year.
Central to her agenda is a thorough review of existing financial services regulations, aiming to eliminate unnecessary or redundant rules. This is part of a broader effort to maintain the sector’s global competitiveness.
The financial services sector is the jewel in the crown of the UK economy.
Maintaining Global Competitiveness
Reeves highlighted the risks of losing business to other financial centres. She mentioned the migration of company listings to New York or the relocation of US banks to other European cities.
Reeves is particularly focused on preserving well-paying jobs in financial hubs beyond London. This includes Leeds, where she serves as an MP.
Her predecessor, Jeremy Hunt, initially introduced the secondary objective as part of the UK’s post-Brexit financial regulation reforms last year.
Engagement with International Investors
During her tour, Reeves met with leading Canadian pension funds. The UK government aims to use these funds as a model for local authorities to increase investment in higher-risk sectors of the economy.
Reeves has made economic growth a cornerstone of her plans for both the UK economy and public finances. These efforts align with the growth initiatives in the Financial Services and Markets Act by the previous government.
Preserving the Financial Services Sector
Reeves’ remarks underscore the importance of keeping the UK’s financial services sector competitive.
She believes that regulatory bodies must actively support this objective to ensure the sector remains robust.
Reeves emphasises the need for growth and competitiveness in the financial services sector.
Rachel Reeves’ commitment to prioritising economic growth through regulatory reforms highlights the government’s proactive approach.
By pushing for clarity and action from the FCA and PRA, Reeves aims to secure the UK’s position as a leading global financial hub.