What does Labour’s financial sector plan mean for the City of London?

Britain’s opposition Labor Party, which opinion polls predict will win this year’s election, said on Tuesday it is concerned about its global competitiveness after Brexit as its arch-rival New York state invites British companies to list. It laid out a blueprint for “unashamedly defending” the financial sector. market.

What are workers proposing?

Labor has traditionally been seen as skeptical of the financial sector, which generates £100bn of tax revenue and accounts for 12% of the UK economy, but the city is one of Britain’s “greatest assets” and key to accelerating growth. claims.

Like the current government, Britain’s tight budget means Labor will have to rely heavily on private sector funding to fund new infrastructure and other investments to boost growth.

Labor said it would strengthen the global competitiveness of the financial sector, strengthen consumer protection, lead the world in sustainable finance and embrace fintech.

It would also stimulate capital markets by reshaping pensions and savings to make it easier to invest in infrastructure, growth companies and clean technology. He also supports relaxing capital requirements for insurance companies to free up cash for investment.

It will continue in the future

The party also wants to increase the number of women working in the financial sector by supporting existing initiatives and deepening cooperation with the EU in financial services.

A bespoke capital buffer for UK banks’ retail divisions, known as ring-fencing, will remain.

Labor will regulate the ‘buy now, pay later’ sector, reflecting the BoE’s wariness about the digital pound and reversing the government’s decision to scrap the EU-originated cap on bankers’ bonuses. isn’t it.

Labor says it will provide “further clarity” on capital markets policy in 2024.

What’s new here?

There isn’t much content so far. The plan reflects the government’s plans and has been praised by industry, but seen as an insidious criticism by MPs who say it has so far had little impact.

After leaving the EU in 2020, the Treasury conducted more than 30 public consultations and a fundamental review of the UK’s financial services rules.

This led to the ‘Edinburgh Reform’, a series of measures aimed at fundamental changes to listing rules, easing capital requirements for insurers and other reforms.

Parliament approved wide-ranging Financial Services and Markets Bill last year, giving the Bank of England and the Financial Conduct Authority a range of new powers and keeping the City’s global competitiveness and economic growth in mind when developing new rules. I was given new authority to put it.

The Treasury has also spearheaded the Mansion House Compact, which persuades pension plans to invest some of their cash in growing companies.

The FCA has introduced a ‘consumer duty’ for financial companies, which is the most fundamental change in consumer protection in decades. It also proposes strengthening oversight of the diversity of financial institutions.

The government has set out reforms to make ring-fencing more flexible, but has so far ignored industry calls for it to be abolished, and has also proposed that the FCA regulate the buy now, pay later credit. are doing.

more of the same thing

After the turmoil of Brexit and the upheaval of activity under the Conservative government, one financial industry official welcomed Labor’s assurance that there would be no major departures from the reforms already underway when it comes to power.

The city hopes a “partnership council” made up of departmental and industry representatives will quickly implement these reforms to keep up with the EU, which has approved similar changes to listing, insurance capital and other rules. We want it to be implemented, and the Labor Party is waving its flag.

Attack the government?

Positive Money, which campaigns for a financial sector that supports a sustainable economy, said Labor’s plan would simply copy what the government was already doing by becoming too collusive with the city.

The industry says regulation is just one factor in competitiveness. Easily hiring people from around the world and having a tax system that is competitive with competing centers are important, but regulation is even more difficult to tackle.

Labour’s warm overtures to the EU on financial services will be welcomed, but as Brussels passes legislation to acquire euro derivatives clearing from London, Brexit leaves the city largely cut off from the EU. Few expect that access will improve significantly anytime soon.

(Reporting by Hugh Jones; Editing by David Evans)

topic
London