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), which mandates that these regulators must “facilitate the international competitiveness of the UK economy … and its medium to long-term growth.”
In recent comments, Reeves expressed concerns that the City’s regulatory bodies may not be fully committed to these objectives. Alongside Tulip Siddiq, the new Economic Secretary to the Treasury, she has been pressing regulators to clarify their actions in support of the secondary objective, asking, “What are you doing in practice to meet that secondary objective?”
The FCA, which oversees nearly 50,000 UK businesses to ensure market competition and the proper functioning of financial services, and the PRA, a division of the Bank of England responsible for supervising 1,500 financial firms, are at the centre of this regulatory push.
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 the existing financial services regulations, aiming to eliminate unnecessary or redundant rules as 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, but we must remain competitive in an increasingly tough global landscape,” Reeves remarked. She highlighted the risks of losing business to other financial centres, such as 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, including 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. This move also requires the FCA and PRA to report on their progress in meeting these growth and competitiveness targets.
During her tour, Reeves met with leading Canadian pension funds, which the UK government aims to use 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, aligning her efforts with the growth initiatives embedded in the Financial Services and Markets Act by the previous government.
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Rachel Reeves: Regulators must prioritise UK economic growth