Hunt to tackle EU red tape to boost City post-brexit

Reform package aims to increase the financial sector’s ability to drive investment and growth

JEREMY HUNT is to tear up hundreds of pages of “overbearing” EU legislation in a bid to boost Britain’s financial services industry after Brexit.

The Chancellor will today in Edinburgh announce a package of reforms aimed at increasing the City of London’s competitiveness by relaxing ring-fencing rules on smaller banks and mandating financial regulators to focus on economic growth as well as consumer protection.

However, his plans are expected to be less radical than previously anticipated, with Mr Hunt abandoning the use of the term “Big Bang 2.0” in favour of the “Edinburgh Reforms”, further distancing the Government from more radical proposals planned by his predecessor Kwasi Kwarteng.

The original phrase was a direct echo of Margaret Thatcher’s deregulation of the Square Mile in the mid-1980s.

Mr Hunt is expected to say: “This country’s financial services sector is the powerhouse of the British economy, driving innovation, growth and prosperity across the country.

“Leaving the EU gives us a golden opportunity to reshape our regulatory regime and unleash the full potential of our formidable financial services sector.

“We are delivering an agile, proportionate and home-grown regulatory regime which will unlock investment across our economy to deliver jobs and opportunity for the British people.”

It comes as one of the country’s biggest business groups warned that Mr Hunt’s tax raid in the Autumn Statement has had a “chilling effect” on the economy and risks damaging the UK’S competitiveness. The British Chambers of Commerce (BCC) said the Chancellor’s decision to hike business taxes had hit already dwindling corporate confidence as it downgraded its economic forecasts for growth, jobs and investment.

Mr Hunt and Andrew Griffith, the City minister, will meet with City chief executives today to discuss the reforms and how the financial services sector can further drive investment and growth.

The reform package will include a relaxation of ring-fencing rules on some banks. Ring-fencing requires banks to separate their retail banking services from their investment and international banking activities and was introduced as a response to the financial crisis.

Britain’s biggest lenders will still be required to adhere to the ring-fencing requirements but smaller banks, such as Santander UK, Virgin Money and TSB Bank, will likely be exempt.

The changes could also include a review of the Mifid 2 rule book – regulation around financial research – as well as deregulation of trading rules to boost flexibility for investors and plans to reduce the influence of proxy voting agencies, which have been criticised for pushing a Left-wing agenda in the City.

It comes after Mr Hunt and Rishi Sunak, the Prime Minister, last month abandoned plans to give ministers the power to overrule City regulators.

It is understood that it will take until the end of next year for the Treasury to repeal the Eu-era legislation.

Simon Morris, a financial services partner at City law firm CMS, welcomed the reforms but said: “Headline reforms are only half the story, and the City needs continued stability to thrive.”

Meanwhile, Alex Veitch, the BCC’S director of policy, said: “Business confidence has been falling for months. It is now clear that the September minibudget and Autumn Statement have had a further chilling effect.

“Very few firms will be willing to invest as they face a wall of higher prices, interest rates and taxes.”