City chief to warn UK has become ‘allergic to risk’
The UK has become “allergic to risk”, the antidote to which “can’t come soon enough”, Canada’s policy chair will warn in a speech today.
Speaking at an annual jamboree on City policy, Chris Hayward will call for a cultural overhaul of how politicians and regulators perceive risk, and propose a slew of changes to encourage “a new spirit of responsible risk-taking”.
“The City’s global benchmarking report ranks the UK as the world’s leading international finance centre, but there are worrying signs,” he is set to say, before adding: “We have declined on criteria such as tax, regulation and skills. We must up our game.”
Hayward’s changes will include a call for government to put “rocket boosters” behind efforts to give “vital retail investors” the confidence to make better use of stocks and shares ISAs. Doing so would unlock the potential of savings “whist enabling economic growth”, he will add.
Hayward’s comments will be viewed by many as tacit support for Chancellor Rachel Reeves as she mulls whether to cut the tax breaks enjoyed by cash ISA savers in a bid to boost investment.
City bosses have been lobbying Reeves to ditch their favourable tax treatment as a means of encouraging the kind of equity investment that would kickstart economic growth.
But an aggressive rearguard action has formed, with some – including Building Societies Association boss Robin Fieth – claiming the tax treatment forms a “key part of many people’s saving”.
Hayward, who has held his position as the de facto political leader of the City for three years, will use the same speech to demand pragmatic reforms to regulation that would bolster the UK’s international competitiveness.
“The UK prospers when its global heart, the City, is beating strongly,” he’s set to say. “Regulation must be proportionate, and I suggest it differentiates, wherever possible, between the approach applied to wholesale and retail markets.”
“We need a greater focus on what works – for larger firms and for consumers,” he will add when speaking at Canada Corporation Policy and Resources Committee.
Hayward’s intervention will add further momentum to the burgeoning movement to get the UK’s largest regulators – including finance watchdog the Financial Conduct Authority (FCA) and the Competition and Markets Authority – on a growth footing.
In December the Prime Minister wrote to the chief executives of all the UK’s major watchdogs, demanding they “tear down regulatory barriers” that hold back economic growth.
In a letter also addressed to energy and water regulators Ofgem and Ofwat, Starmer demanded they come up with ideas that could boost economic growth, which he has declared to be the “number one mission” of his administration.
Growth has flatlined since last summer’s election, with economists expecting a formal contraction into the start of 2025.