The British government will announce post-Brexit reforms on Friday aimed at stimulating the growth of the powerful financial sector, in particular to reverse certain measures which had been put in place in the wake of the 2008 crisis.
Chancellor of the Exchequer Jeremy Hunt will announce in Edinburgh “a set of 30 regulatory reforms to secure the UK’s place as the world’s leading financial centre,” said a statement from the British Treasury.
Laws guaranteeing the separation of retail and investment activities within a bank, a legacy of the 2008 financial crisis and which aimed to avoid conflicts of interest (“ringfencing” in English) and to protect the money of consumers, will be updated to extract from these constraints “banks that do not have a major investment activity”, says the press release.
The regulators, FCA for the markets and PRA for the banks, “will be given the objective of generating growth and will carry out an extensive review to strike down hundreds of pages of European Union legislation”.
“The Edinburgh reforms will give unparalleled vigor to British financial services, taking advantage of the opportunities offered by Britain’s exit from the EU” to generate “a regulatory framework tailored to the needs of the country”, argues the Treasury.
In particular, rules that “stifle growth will be overhauled, with overly restrictive EU laws discouraging companies from listing in the UK to be overhauled (…) within a Financial Services Bill and markets”.
The British government had already launched a few months ago the part of the reform relating to insurance companies, hitherto governed by the European directive Solvency II.
London plans in particular to relax capital requirements for companies in the sector, hoping to unlock tens of billions of pounds for “green” and infrastructure investments.
Jeremy Hunt, presenting fiscal measures last month, admitted that the country was already in recession and the Bank of England’s forecasts anticipate a contraction over the whole of next year.
The financial sector generates £216 billion (€250 billion) a year and £76 billion (€88.1 billion) in tax revenue for the state, while employing over 2.3 million people according to the Treasury.