Crisis-era regulation has ‘gone too far’, UK’s Reeves tells finance sector By Reuters

By Sinead Cruise and David Milliken

LONDON (Reuters) -Finance minister Rachel Reeves on Thursday promised a reboot of regulation governing Britain’s “crown jewel” financial industry, which she said has shackled the City’s prospects since the global financial crisis and stifled British economic growth.

In a speech at the City of London’s ornate Mansion House, Reeves vowed not to take Britain’s status as a global financial centre for granted and pledged a raft of growth-focused reforms.

Her speech came as leaders across the industry brace for a possible bonfire of regulation on Wall Street during President-elect Donald Trump’s second term in office, with leaner taxes and lighter rules on capital likely to widen an earnings gap between U.S. banks and their global competitors.

“While it was right that successive governments made regulatory changes after the global financial crisis, to ensure that regulation kept pace with the global economy of the time, it’s important we learn the lessons of the past,” Reeves said. 

“These changes have resulted in a system which sought to eliminate risk taking. That has gone too far and, in places, it has had unintended consequences which we must now address.” 

The former Bank of England economist proposed five areas to maximise growth in British financial services: capital markets, fintech, sustainable finance, asset management and wholesale services, and insurance and reinsurance.

Reeves said the government would publish a financial services strategy early next year as part of a broader 10-year industrial plan.

“The UK has been regulating for risk, but not regulating for growth,” the chancellor said, announcing that she had written to the Bank of England and Britain’s Financial Conduct Authority to instruct them to put greater effort towards supporting government growth goals as well as financial stability.

BoE Governor Andrew Bailey, speaking immediately after Reeves, did not address her criticism of regulators but welcomed the government’s focus on growth and recommended rebuilding trade ties with the European Union.

Reeves and Prime Minister Keir Starmer promised voters in July’s election that they would turn Britain into the fastest-growing Group of Seven economy after years of sluggishness.

Her latest proposals were broadly backed by financiers.

“It’s crucial the UK’s regulatory framework is effective and well-calibrated. We therefore welcome the chancellor’s recognition of the need for a more balanced approach…