City joy as Brexit allows rule book to be rewritten but this is not Big Bang 2.0

Jeremy Hunt has announced a series of reforms designed to bolster the city’s role as a global financial centre, partly by scrapping rules that were in place when Britain was still in the EU.

The Chancellor said they would help secure the UK’s status “as one of the most open, dynamic and competitive financial services hubs in the world”.

But the changes are no longer described as a “Big Bang 2.0” – the tag Hunt’s predecessor Kwasi Kwarteng gave to his plans for a regulatory bonfire. Instead, Hunt said, the more austerely titled Edinburgh Reforms will “seize our Brexit freedoms to create a flexible and homegrown regulatory regime that works in the best interests of Britons and our businesses.”

The changes include a review of rules introduced after the financial crisis to make senior bankers more accountable for their decisions.

They will also water down “ring-fencing” regulations that were designed to protect high-street banks from the riskier investment arms of lenders. Hunt said it would be wrong to describe the 30 measures as a ‘Big Bang’, a reference to Mrs Thatcher’s original deregulation of the stock market in the 1980s.

He told an online event organized by the Financial Times: ‘We need to make sure we don’t unlearn the lessons of 2008, but at the same time recognize that banks today have much stronger balance sheets and we have a much stronger settlement system. if it does go wrong.

‘In that context, it is very sensible to implement pragmatic changes, such as those we are announcing today. But we’re doing this very, very carefully to make sure the UK is competitive and exciting – the place to be and the place to invest, but also not to lose the guardrails that were put in place after 2008.”

Hunt outlined the changes in Edinburgh, after which the package was named, drawing attention to the fact that Scotland’s capital is one of the key locations outside the City of London that would benefit from being part of the UK’s financial services.

The Treasury cited figures showing the sector contributes £216bn a year to the UK economy. But the emphasis seems to be on changing rules rather than ignoring international standards and discarding rules altogether.

Some feared that too drastic measures risked forcing costly changes to their systems and damaging trade relationships around the world.

The reforms include implementing recommendations from a 2021 review that aim to boost equity market participation, simplify the process for companies to raise money in the capital markets and make the UK a more attractive destination for listings.

Other steps include repealing and reforming rules introduced when Britain was still part of the EU. Labor accused the government of a ‘race to the bottom’.

But The City UK, a trade body, said it was a “helpful and incremental set of reforms rather than a complete overhaul of how the market works.” And Stephen Bird, chief executive of asset manager Abrdn, said: “We welcome today’s announcement with its clear focus on the competitiveness and future success of the UK financial services industry.”