Deregulation and green finance are at the heart of Chancellor of the Exchequer Rachel Reeves’ plan to secure the U.K.’s status as a global powerhouse in the financial services sector.
The government has already unveiled a raft of changes to the U.K. retirement system, including plans to overhaul local authority pension fund governance and encourage further pooling of assets, and to bring together the country’s defined contribution plans into “megafunds.”
On Nov. 14, in her inaugural Mansion House speech in London, Reeves will say that regulatory changes made after the global financial crisis created a system that has been “regulating for risk, but not regulating for growth,” according to a news release.
Reeves’ plan is to rebalance the system and set the U.K. financial services sector up to innovate, grow and seize opportunities for investment in businesses, infrastructure and clean energy across the country.
The government will set new growth-focused remits for financial service regulators and will next year publish the first “financial services growth and competitiveness strategy.”
The U.K. financial services sector is “the crown jewel in our economy,” Reeves will say, citing that the sector employs 1.2 million people, accounts for 9% of the U.K.’s economic output, and is the second-largest exporter of financial services in the Group of Seven markets.
Reeves will say that regulatory changes in the wake of the Great Recession were necessary “to ensure that regulation kept pace with the global economy of the time,” but that these rules have “resulted in a system which sought to eliminate risk taking,” leading to unintended consequences.
She will stress that high regulatory standards will be maintained, with the system being “rebalanced to drive economic growth and competitiveness.” The chancellor has already written to regulators, including the Financial Conduct Authority, to ensure a greater focus on supporting economic growth, the release said.
Regarding clean energy and growth, Reeves will also set out plans to mobilize trillions of pounds of private capital to support the U.K.’s work to be a “global leader in climate change,” the release said. The government is also set to regulate ESG ratings providers in an effort to boost investor confidence in sustainable companies, will publish a consultation on the value case for a U.K. “green taxonomy,” and launch integrity principles for voluntary carbon and nature markets ahead of a consultation next year.
