- Corporation Policy Chairman praises partnership between business and government
- Regulatory proposals can provide ‘quick wins’ for short-term growth and position UK competitively over long-term
- New research confirms London as leading global financial hub for fifth year in a row (see Notes to Editors for details)
‘The UK has become allergic to risk, and the antidote cannot come soon enough’ Corporation Policy Chairman Chris Hayward will say in a keynote speech today (Wednesday 12 February).
Hayward will be speaking at Haberdasher’s Hall in the Square Mile alongside crossbench peer Lord Sedwill, the former Cabinet Secretary, at the annual Corporation Policy & Resources Committee.
In his speech, Hayward will say ‘the Bank of England’s recent downgrading of the country’s growth outlook further highlights the scale of our enormous challenge’.
He will add that the UK needs a cultural change on risk, and propose several regulatory reforms which can provide the UK with ‘quick wins’, complementing the Chancellor’s speech on long-term investment in January.
On championing the City’s contribution to UK growth, the Policy Chairman is expected to say:
“Business confidence in the Square Mile is high. In the City, we now have 678,000 workers; 25% higher than before the pandemic.
“Last year alone saw a record 331 office leasing deals, welcoming new occupiers like HSBC, Clifford Chance, and Moody’s.”
“We are home to a burgeoning tech industry; 11’unicorns’ in fintech, AI and data.
“In the last year, the Policy and Resources Committee has taken decisions that will secure our attractiveness for generations to come:
- launching our first ever SME strategy to support growing firms;
- funding the renewal of the Barbican and;
- the historic decision to open up the Smithfield site to develop a truly global cultural quarter centred around the new London Museum, funded with our partners at the Greater London Authority.
On the need for government, industry and regulators to adopt a ‘new spirit of responsible risk-taking’, the Policy Chairman is expected to say:
“The City’s global benchmarking report (see notes to editors) ranks the UK as the world’s leading international finance centre, but there are worrying signs.
“We may have strengthened on tech and market access, but we have declined on criteria such as tax, regulation and skills. We must up our game.
“Whether in government, regulators or industry – we need a new spirit of responsible risk-taking.”
On measures to help boost growth over the short-medium term, is expected to say:
“Barclays research (see Notes to Editors) reveals UK consumers have £430bn that they could put to better use by investing. This issue has been debated for years and years.
“The FCA is finally taking action through its Advice and Guidance Boundary Review, because we need to give our sector the freedom to help consumers.
“We need to put rocket boosters behind this change and complete these reforms as soon as possible.
“The regulator’s disclosure rules also need to be addressed, so consumers receive balanced messages about risk and rewards (see Notes to Editors).
“We support a healthy investment culture, where people have confidence to invest as well as save. There’s no reason why only 39% of adults in the UK are active investors whereas 61% in the US do the same (see Notes to Editors).
“Changing this could come through looking at how we encourage greater flows of capital into stocks and shares ISAs. Indeed, let’s call them what they are – Investment ISAs, that give retail investors a stake in a dynamic UK economy.
“And encouraging reform to make retail investing more attractive is in-keeping with our ambitions set out in the Mansion House Compact, which unlocks the potential of pension savings whilst enabling economic growth.
“We need to be bolder. And we need to move faster.
“Seeking a greater risk appetite brings more chance of downsides as well as the rewards. So, if we are asking the regulators to take more risk, government and industry must stand by them when – in good faith – there is a failure.
“Second, the retail offer is vital. But so too is reinforcing our international competitiveness. The UK prospers when its global heart, the City, is beating strongly.
“Regulation must be proportionate, and I suggest it differentiates wherever possible between the approach applied to wholesale and retail markets.
“Let me clear, I am neither calling for de-regulation… nor for a reduction of consumer protection. But we need a greater focus on what works – for larger firms, and for consumers.
“We must continue adapting and change to deliver prosperity and growth for this country – as the City is Square Mile has always done.”
Addressing tariffs, the Policy Chairman is expected to say:
“Our closest trading relationships are based on so much more than just business. History and culture, along with shared ambitions and values, bind us together in common pursuit. We must reaffirm this message as often and as loudly as possible during the months ahead.”
Concluding his speech, the Policy Chairman is expected to say:
“The Chancellor has called the financial and professional services sector the engine room of the UK economy. It’s critical then that the Government prioritises these sectors to drive much-needed economic growth.
“I truly think that we are focusing so strongly on avoiding failure, that we fail to support success.
“The bottom line is that we’ve become allergic to risk. And finding the antidote can’t come soon enough.”
ENDS
Notes to Editors
- 39% of adults in the UK are active investors whereas 61% in the US do the same
Source is a report by The Investment Association, ‘Investment Management in the UK 2023-2024’, October 2024. P76 of the report states: “Much comparison has been made between capital market participation rates in the UK and US. The perception of a more active culture of investing in the US stems from data that suggests that two thirds (61%) of American adults have money invested in the US stock market according to Gallup. While many older UK adults were introduced to share ownership through the privatisation of nationalised industries in the 1980s, this failed to convert the majority of adults into becoming more active investors. The IA survey found that as of 2023, less than half (39%) of the adult UK population were actively investing in products such as individual stocks and shares, stocks and shares ISAs, investment funds and trusts, individual investment bonds and cryptocurrencies. Of these investors, about a third began investing in the period following the start of the COVID-19 pandemic in early 2020.”
2. The regulator’s disclosure rules need to be addressed
In September 2024 Barclays published ‘Empowering retail savers to engage with investing: the role of public policy”. This report stated that “even after establishing a prudent emergency fund, there remains an estimated £430bn of UK consumer savings, held in cash by 13 million individuals, that could be invested.” The same report made recommendations to make the investment journey easier for retail investors, including creating ‘entry level’ investment products and for these products to have a simpler sign up journey: “This would reduce some of the current frictions in the sign-up journey in terms of declarations, risk warnings and product documentation for entry-level investors.”
In September 2024 the FCA announced that it is creating a new UK retail disclosure regime. In particular, the EU-inherited Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation will be replaced with a new framework for Consumer Composite Investments (CCIs). The Government’s principles for the new UK Retail Disclosure Regime include “ensure that the disclosure that retail investors receive is proportionate to the risk that they are taking in purchasing an investment product” and “provide additional choice for retail investors, and to reduce burdens for firms.”
Benchmarking report
The City Corporation’s report, Our global offer to business: London and the UK’s competitive strengths supporting investment growth, shows that the UK has retained its top position despite economic and geopolitical headwinds.
While London’s overall score saw a slight dip of 1 point to 58 this year, the city remained firmly ahead of rivals like Paris, Hong Kong, and Singapore, who showed growth. New York and Singapore ranked second and third, with New York slipping by 2 points to 55 and Singapore gaining 1 point to 49.
Key highlights from the report include:
- Fintech growth: London continues to lead Europe in tech innovation, with 746 new fintech companies launched in the UK in 2023, more than double the number launched in France and Germany combined. The capital remains Europe’s largest tech ecosystem, trailing only New York globally.
- Sustainable finance: London retains its top position in sustainable finance, outpacing New York and Paris. The city’s commitment to ESG and transition finance continues to grow, with companies across the Capital focused on moving toward a net-zero future.
- Cross-Border lending: London is the world leader in cross-border lending, holding a 14.4% market share, and borrowing, with a 15.7% market share, each worth £4.4 trillion.
However, the report also identifies several challenges:
- Financial activity decline: There has been a global decline in financial activity, with a notable reduction in capital markets. This trend is reflected across all major financial hubs.
- Investment downturn: Foreign direct investment in London dropped by 29% in 2023, from £1.1 billion in 2022 to £829 million, largely due to global economic uncertainty.
- Office Vacancy rates: London’s office vacancy rates rose to 8% in 2023, as traditional office spaces evolve to meet the demand for flexible and remote working.
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