“Wet squib.” This is the term used by a British parliamentary report attacking the series of post-Brexit reforms aimed at stimulating the growth of the UK’s powerful financial sector, launched a year ago by London. He believes that they will have “little impact on the economy.”
The British government launched with great fanfare, in December 2022, the “Edinburgh reforms”, some thirty measures “to guarantee the United Kingdom’s place as the main global financial center”, in particular revoking some measures applied as a result of the crisis of 2008.
As a flagship measure, the Government intends in particular to eliminate, for small banks, the rules that currently separate retail and investment activities within a bank (“ring-fencing” or compartmentalization). But this project is still underway: the government organized a consultation on this issue between last September and November.
Preparatory work
The government claims to have completed around twenty reforms during the first year. But, according to the Treasury Committee report, “six of the actions considered ‘complete’ by the government have not yet been completed.” Furthermore, “six other measures should not be considered reforms to the extent that they cover actions such as the publication of a document or the receipt of the results of a consultation,” the commission continues in a statement.
Parliamentarians also believe that a certain number of announced measures constitute more preparatory work than real reforms. “More than a decade after the financial crisis and six years after the Brexit vote, the government was absolutely right to consider updating regulation of the financial services sector,” said Treasury Committee chair Harriett Baldwin.
“Lack of progress”
But twelve months after the launch of the Edinburgh reforms, “the lack of progress or economic impact makes them look like a firecracker,” she added, quoted in the press release. These reforms “showed the United Kingdom’s determination to promote a sensible, innovative and robust financial landscape,” Secretary of State for the Treasury, Bim Afolami, said in a separate statement on Friday. The Government claimed, in particular, to have fulfilled another of its promises on Friday, launching its “first proposals aimed at improving consumer access to help in making financial decisions.”
For more than a year, the British government has been increasing reform projects to stimulate the growth of its financial sector and defend the City of London against the greatest competition since Brexit from other European financial centers, such as Paris and Amsterdam. . Another flagship measure notably plans to relax capital requirements for insurance companies to unlock tens of billions of pounds of investment. Although the announcements are generally well received by professionals in the sector, they often raise reservations, and even criticism, from NGOs, experts or parliamentarians, who fear that London is going too far in deregulation.
Source: BFM TV
