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CITY CHIEF BUDGET WARNING: “SUPERCHARGE – DON’T STALL

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CITY CHIEF BUDGET WARNING: “SUPERCHARGE – DON’T STALL

  • Corporation outlines budget measures on connecting capital; investment; and regulation 

  • Square Mile jobs figures now 25% above pre-pandemic levels (678,000) 

 

Corporation Policy Chairman Chris Hayward is encouraging the Chancellor to back financial services as the UK’s growth engine ahead of the Budget.

The City Corporation runs London’s Square Mile, which generates an annual economic output of more than £110 billion according to the latest figures. 

In the last two weeks alone, the City Corporation has proven itself as the partner of choice for Government on financial services policy. The Office for Investment:

Financial Services – a partnership between HM Treasury, financial regulators and the Corporation to make the UK the best place in the world to invest and do business – is now fully operational.

Just last week Chancellor Rachel Reeves announced plans to build on the Mansion House Accord at the Regional Investment Summit, mobilising billions of pounds into projects that can boost UK productivity, the route to sustainably increasing people’s living standards. 

Recent research highlights a £115 billion investment gap in the UK, which the City Corporation’s budget submission is designed to address.

Chris Hayward, Policy Chairman at the Corporation, said:

“The financial services sector is the engine of the UK economy; it must be supercharged – we cannot afford to let it stall. Given the £115 billion investment gap, this Budget must be the moment to inject creativity; capital and confidence needed to drive growth. Sending the right signals to wealth creators is essential for boosting tax receipts that pay for sustainable public services.

“The City Corporation plays a leading role in building the architecture for investment – from the new Office for Investment: Financial Services to delivering the Mansion House Accord. The next step is for Government to help identify a credible pipeline of investible projects to unlock jobs and prosperity across all regions and nations of the UK.”

City Corporation’s recommendations for the Autumn Budget include:

  1. Pursue tax policy supporting the UK’s industrial strategy 

The City Corporation calls for a more agile, internationally competitive regulatory and tax framework and urges HM Treasury to:

  • Keep financial services VAT free.
  • Phase out the bank levy and surcharge to increase our international competitiveness.
  • Abolish stamp duty on UK shares. As a first step, remove stamp duty on recent IPOs to encourage more London listings.
  1. Maximise Domestic Capital
  • Government needs to urgently develop a credible pipeline of investible projects, particularly in areas that will enhance UK productivity such as digital, energy, and transport infrastructure.
  • Support for the Employer Pension Pledge, already backed by over 20 major UK employers representing more than one million pension pots. This will mean that employers focus more on value for money when selecting pension providers.
  • Encourage regulators to keep pace on value for money framework to enforce culture shift from cost-minimising approach to prioritising returns for savers
  • On retail investment, the Government should encourage a culture shift from saving to investing, by:
    • Reviewing incentives between Cash ISAs and Stocks & Shares ISAs.
    • Finalising the Advice Guidance Boundary Review and supporting firms to offer targeted support to investors.
    • Consider policy options to nudge savers towards equity investment when in their best interests, particularly in UK-listed equities. One option could be to boost savings via the workplace similar to how employers currently support workplace pensions. The City Corporation is scoping research on this, with findings to be published next Spring.
  1. Raise Investment Levels
  • To match investors with opportunities, the new Office for Investment: Financial Services, must adopt an AI-enabled digital platform to connect capital with projects, automate onboarding, and improve responsiveness.
  • The OFI offers a ready-made vehicle to meet investor demand and ensure the UK keeps pace with global competitors.
  1. Lead on Sustainable Finance
  • The UK has a window of opportunity to lead globally on sustainable finance. The City Corporation calls for stronger alignment of public finance institutions to help build investable transition markets and de-risk private capital.
  • The Government should also champion the Transition Finance Council’s Guidelines consultation at COP30, ensuring the UK sets the global standard for transition finance.

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