Strap a rocket to UK banks or watch the City drift, shadow chancellor warns
Shadow chancellor Mel Stride has called for a tearing down of burdensome City regulation to power up the financial services sector and avoid it losing status.
The Tory MP said the pendulum has swung “too far in favour of trying to iron… [and] squeeze risk out of the system”.
Stride called for a “bonfire of regulation,” warning if efforts weren’t made to deregulate he was “quite fearful about where the City and financial sector would start to drift.”
His comments follow City minister Lucy Rigby on Tuesday telling the Financial Times Global Banking Summit that she believed banks had finally been taken off the “naughty step”.
The Labour MP called for the industry to be championed as she confirmed the review into the widely aggrieved ring-fencing regime would aim to strike a “competitive market”.
But Stride said reforms for the sector must go further, calling for the City banks to be “put into a rocket and turbo-charged”.
Banks’ rocky Budget road
UK banks suffered a volatile road to the Labour government’s second Autumn Budget, with significant speculation whether the industry would be subject to a tax raid.
Chancellor Rachel Reeves faced fiercely lobbying calls from think tanks, politicians on the opposite side of the House of Commons and even former Deputy Prime Minister Angela Rayner.
Amidst the back and forth briefings in the run up to 26 November – since dubbed the ‘Leaky War’ – bank shares were caught up in the chaos.
Natwest shed five per cent in a single trading session at the end of August after the left-leaning Institute for Public Policy and Research (IPPR) called for an annual £8bn tax on the sector targeting profit “windfalls” from quantitative easing.
The losses wiped nearly £2.5bn off the bank’s market value, with a total £8bn loss in the FTSE 100’s Big Five banks, including Lloyds, Barclays, HSBC and Standard Chartered.
But when lenders were spared from a cash raid, firms flocked to announce fresh injections of capital into the UK economy.
In the 24 hours following the Budget, JP Morgan said it would build a £10bn Canary Wharf tower marking its largest European presence whilst US banking juggernaut Goldman Sachs said it would commit “several billion pounds” into UK infrastructure and add 500 jobs to its Birmingham site.
Britain’s largest retail bank Lloyds Banking Group unveiled £35bn of new finance for 2026 to companies operating and investing in the UK in the hours following the Budget.
FTSE 100 giant Barclays also promised to “boost support to UK businesses and consumers” with further £45bn lending.