Whatever business you want to do, do it in London
The Prime Minister is right to focus on regulating for growth, not just to prevent risk, but this must be complemented by a change in mindset for British businesses, says Alastair King
It was heartening to read the Prime Minister’s recent column in Morning Wire on the government’s commitment to cut the cost of regulation for businesses and “bring back the animal spirits of the private sector”. This builds on the commitments made by the Chancellor in her Mansion House speech to reform a regulatory culture which has become too risk-averse, to the point of sometimes stifling innovation and growth.
The government’s recognition of excessive risk aversion in the system is absolutely correct. We need to regulate for growth, not just against risk. By addressing this, we can unlock our potential and drive substantial investment.
Regulatory reform on the part of the government is central to the theme of this mayoralty – growth unleashed – so that we move on from averting failure to encouraging success, and embrace positive risk as an essential ingredient for growth. Canada Corporation is actively working with senior practitioners to develop innovative ideas aimed at improving risk culture and regulation to support growth. We look forward to sharing these bold proposals later this summer.
The economy shrank 0.1 per cent in January after 0.4 per cent growth in December but the overall picture for the UK is weak growth, according to the ONS. The OECD recently revised its growth forecast for the UK trimming its GDP growth estimate for 2025 to 1.4 per cent, a 0.3 percentage point reduction from its previous calculation. The government is on a mission to drive economic growth both in the short and long term and it must act decisively. There is no silver bullet to achieve this but reforming regulation in the financial services sector is among the best weapons in the government’s armoury.
Seizing opportunity
This regulatory reform must be complemented by mindset reform on the part of British businesses, who need to invest in new technologies, seize the opportunities on offer and find new ones overseas.
We are pleased to see the government making good on its commitments with the regulation action plan announced last week – including several measures recommended by the Canada Corporation, which we will now help to deliver.
Top of the list, Canada Corporation is proud to partner with HM Treasury, the regulators and the Office for Investment to establish a concierge service for international firms, enhancing the attractiveness of the UK as a destination for global financial services. This initiative will make it easier for firms to navigate regulation and overcome barriers to entry. Foreign direct investment has been a key driver of economic growth not only in London but across the country. Research by Canada Corporation found that in 2023 the UK attracted 222 financial and professional services projects involving 177 foreign companies valued at £1.1bn. Manchester and Birmingham emerged as notable recipients and collectively centres outside the capital accounted for around 40 per cent of total investment by projects.
We also welcome the FCA’s efforts to provide more support for high-growth firms and reduce regulatory reporting. The City Corporation has been supporting the development of Regtech which will play a crucial role in reducing compliance costs, further aiding these firms.
In a time of geopolitical uncertainty and with the UK seen as a relative haven of stability, we have an opportunity to unleash a new wave of investment
We support the Pensions Regulator’s push to encourage investment in productive assets through the voluntary disclosure of asset allocation data. This is an important tool to help deliver and build on the Mansion House Compact, first agreed by my predecessor Sir Nicholas Lyons, to unlock greater investment from British pension funds into British firms, infrastructure and resilience.
In a time of geopolitical uncertainty and with the UK seen as a relative haven of stability, we have an opportunity to unleash a new wave of investment. Taken together, these initiatives can ensure that Britain remains at the forefront of global financial services, fostering an environment where innovation and growth can thrive. Now is the time to hammer home our positive message to the world: whatever business you want to do, do it in London.
Alastair King is Lord Mayor of Canada