UK to ‘go further’ with deregulation in Brexit battle to protect City

BRITAIN will “go further” with postBrexit financial deregulation if needed, to protect London’s status as an international hub, the City minister has said, amid fears of an exodus by major firms.

Andrew Griffith said the Square Mile will be boosted by reforms already in train, but vowed to do more if required.

It follows consternation about the future of the City after British microchip champion Arm snubbed the London stock market for a blockbuster listing in New York.

Writing for The Sunday Telegraph, Mr Griffith said: “If we need to go further, then we will. The Financial Services and Markets Bill will complete its journey through Parliament in the coming weeks. It grants us the power to quickly and effectively repeal and replace burdensome pages of European Union laws, and establishes a broader regulatory framework that is smarter, agile, and [proportionate] to the risks posed.”

He added that the Government is already reforming the UK’s prospectus regime and forcing regulators to drive international competitiveness, as well as reforming pension rules known as Solvency II so that fund managers can divert more money into infrastructure. Mr Griffith said: “As City minister, I have always been of the view that we need to go further – and not just rely on past success.

“I never forget that firms have a choice where to locate or to raise or invest capital. The UK must compete for every pound, dollar or euro of that business with the Government providing the supportive environment in which to do so.”

Arm’s decision to list in America has led to a blame game within Whitehall, with UK officials blaming regulatory red tape for driving the business to list in New York.

Under Financial Conduct Authority (FCA) rules, public companies must gain investor approval for transactions with related parties.

This would have potentially forced Arm to get approval before making deals with the many other tech companies owned by SoftBank, its Japanese parent company.

The rules are far more relaxed in the US, where companies are required to simply disclose that a transaction is taking place.

The FCA, which declined to comment, had been in talks with Arm and was reportedly prepared to relax the rules for the microchip company.

But one government insider told the Financial Times that the FCA was not flexible enough: “They were asked to think big but they thought small.”

The regulator is looking at ways to make the rules for listing on London’s stock market less onerous, having opened a consultation on the listing regime last year.

However, there are fears that the proposals will be too late to prevent a wave of other companies following suit as Joe Biden, the US president, offers tens of billions of dollars in subsidies for companies to move to the US.

Several other microchip companies held talks with the White House last week. Meanwhile, the FTSE 100 building materials business CRH said on Thursday that it would shift its primary listing to New York. WANdisco, a London-listed data company valued at nearly £1bn, is considering making the same move, according to a Sky News report yesterday.

Arm’s confirmation of a US-only listing was a blow for Rishi Sunak who had lobbied hard to convince the SoftBankowned tech company to pursue a dual listing in London.

The business has committed to growing its presence in the UK by adding staff in Bristol, and will remain headquartered in the country.