Jeremy Hunt to announce major reforms for the UK financial sector in pursuit of ‘turbo’ growth

Chancellor Jeremy Hunt is set to launch a major reform of the UK’s financial sector, with plans to cut red tape and replace a host of EU regulations.

Hunt said the changes, to be announced later in Edinburgh, will boost growth as the country grapples with a sluggish economy and a cost-of-living crisis.

He said: “This country’s financial services sector is the engine of the British economy, driving innovation, growth and prosperity across the country.

“Leaving the EU presents us with a golden opportunity to reshape our regulatory regime and unleash the full potential of our formidable financial services sector.”

The chancellor will outline more than 30 regulatory reforms, with hundreds of pages of EU rules to be reviewed, repealed and replaced, ranging from financial product disclosure to prudential rules governing banks.

Among the rules in the spotlight is “ring-fencing,” the regulation that requires major banks to keep investment banking and retail banking separate.

This rule was introduced during 2019 and, according to the Bank of England, was designed to “increase the stability of the UK financial system and prevent the costs of failing banks from being borne by taxpayers.”

But the reforms would free banks from the requirements if they do not have significant investment activities.

Banks have previously pushed for the rule to be removed or for the deposit threshold that triggers it to be raised.

London is under pressure after being overtaken by Amsterdam as Europe’s top stock trading hub, and the EU is updating its own financial rules to reduce what remains of its reliance on the city.

Bank of England chief Phil Evans said on Wednesday that being a global financial center brings a number of benefits to the British economy, but also comes with responsibilities such as resisting pressure to “lower standards any time soon.”

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