Finance leaders hoping that Chancellor Jeremy Hunt’s Spring Budget would answer some of the questions for financial services left lingering following Brexit, were left disappointed. Hunt’s speech last month did not reference issues ranging from the future of the government’s rulebook and the bankers bonus cap to London’s status as a listings venue and a regulatory deal with the EU, the leaders noted.
Hunt did not provide an update on the Financial Services and Markets Bill, the government’s flagship legislation which was to work its way through parliament. It hopes the bill will unleash London’s financial district (known as the ‘City’) in the wake of the UK’s split from the EU.
As New York continues to poach prized listings from the City, Hunt said in the Budget he would bring forward measures to make the London Stock Exchange a more attractive place to list, but not until the Autumn Statement later this year.
CEO of real estate stock exchange IPSX, Roger Clarke said: “None of the measures put forward adequately address the evident issues in the market that have seen London lose ground to New York in attracting and retaining listed companies.” Hunt also announced 12 new investment zones across the UK that would benefit from tax breaks and other benefits, but London was not one of them.
“To see London being ignored in the government’s list of areas shortlisted for investment zones to boost innovation is concerning,” said Claire Harding, Centre for London research director. “They should be making best use of the capital’s expertise and resources to support growth in every region of the UK, rather than level London down.” Hunt also did not provide an update on plans to scrap the cap on banker bonuses. The UK inherited the law from the EU’s rulebook. Financial services were left out of the initial trade deal between the EU and the UK that followed Brexit. The two sides have been scrambling to work out a framework for the industry ever since. A memorandum of understanding for how they would cooperate going forward was agreed in March 2021 but has not been signed yet.
The Lord Mayor of London and others have said the chances of a deal have increased since the breakthrough on the Northern Ireland Protocol with the so-called Windsor Framework deal. However, no update was forthcoming in the Budget on the memorandum either.
UK chief investment strategist, of BlackRock Investment Institute, Vivek Paul said: “The Windsor Framework agreement should set the table for a better future UK-EU relationship. But the UK’s standing in the eyes of international investors is not where it was a decade ago and rebuilding a reputation can be slow.
EU authorities have been firm that they expect banks to have appropriate resources in the bloc following the split, which removed their automatic right to operate in EU countries through the so-called passporting system.
The European Central Bank’s recent desk-mapping review identified several “empty shells” being run by international banks on the continent. Various leaders were ordered to either transfer desk heads and risk heads or change their trading models as a result. The European Commission is also looking to force a minimum amount of clearing into the bloc – a temporary equivalence deal allowing EU firms to clear through London is set to expire in 2025.
TheCityUK boss Miles Celic said: “The chancellor’s focus on embracing innovation, boosting business investment and driving growth right across the UK is promising. For the UK to realise its growth ambitions, remain a powerhouse for talent, innovation and investment, and to reaffirm its reputation as a world-leading international financial centre, there must be continued focus on ensuring economic stability and resilience.” (The writer is our foreign correspondent based in the UK)
andyjalil@aol.com
Oman Observer is now on the WhatsApp channel. Click here
