UK finance firms seek ‘bold’ reforms to counter Wall St ascendancy

London: Britain’s finance sector is counting on policymakers to deliver a rulebook revamp that prioritises growth and stops business slipping away to global rivals, amid fresh challenges to London’s financial superpower status.

UK finance minister Rachel Reeves is giving her first Mansion House speech to leaders of the City on Thursday and is expected to outline the role the left-leaning Labour government wants them to play to help increase national prosperity.

But those attending the event are just as eager to hear how she might bolster the industry’s prospects before a likely boom on Wall Street when President-elect Donald Trump returns to power.

Pressure is mounting after Trump vowed to “liberate” the U.S. economy and financial sector by slashing regulations and restructuring federal agencies.

Samuel Gregg, political economist at the American Institute for Economic Research, said the sector in Britain needed to respond fast.

UK finance firms “should be using the second Trump presidency as an opportunity to tell government that financial deregulation and lowering corporate tax rates can be avoided no longer,” he said.

Reeves’ predecessor and officials at the Bank of England have already flexed post-Brexit freedoms to tailor financial rules, beginning with the Edinburgh Reforms package in 2022.

More recent tweaks to Basel global bank capital regulation and proposals to slash deferral periods on bonus payouts have also been interpreted as signs of increased ambition to diverge from the EU.

Britain leapfrogged the EU with its commitment to a 2027 rollout, opens new tab of shorter settlement cycles in securities trading, after the United States, Canada and Mexico made the reform earlier this year.

Before Labour’s landslide summer election win, Reeves, a former Bank of England economist, said she would “unashamedly champion” the UK’s financial sector.

Her government needs the industry’s tax receipts, which totalled 110.2 billion pounds ($140 billion) in 2023, equivalent to more than half the UK health budget, a study commissioned by the City of London Corporation and TheCityUK showed.