Westminster must end City of London ‘neglect’, ex-Johnson adviser says: CityAM
The government must end its “policy of benign neglect” towards the City of London and urgently introduce reforms to the regulation of financial services, according to Boris Johnson’s former economic adviser.
In a report released by the center-right think tank Policy Exchange, Dr Gerard Lyons called for a strong position on separating financial services regulation from the EU after Brexit.
Read more: Frost: City of London must ‘get along and do its own thing’ after Brexit
This includes calls for a review of the capital requirements of small and medium-sized banks in order to “stimulate bank lending to regions”, to restore “the city’s research expertise” by rescinding EU regulations. in this area and by creating a new parliamentary committee on financial services.
Lyons, who worked for Johnson while mayor of London, said the EU “seeks to undermine the position” of the UK’s financial services industry after Brexit.
“The city often prefers politics to stay away, but circumstances have changed,” he said.
“In the face of an aggressive EU and intense global competition, the city needs a government that is ready to fight for it.”
UK financial firms lost their broad access to EU markets at the end of the Brexit transition period on December 31 and must now navigate a patchwork of member state regulations.
The only way for the City of London to regain its pre-Brexit access to the EU is if Brussels unilaterally grants UK equivalence, but the bloc believes the UK government is destined to deviate from its financial services regulations and refused the designation.
European leaders like Emmanuel Macron have made it clear that they see Brexit as an opportunity to steal the crown from London as the continent’s financial capital.
Lyons said London is an attractive city for the global financial services industry due to its regulatory environment and infrastructure that attracts large transactions.
He said the government needs to take action to ensure that clearing houses in London remain, as well as investments in more data centers.
“There is a need to assess the resilience of the UK financial ecosystem and not take anything for granted,” he said.
Chancellor Rishi Sunak indicated earlier this year that he was open to changing financial services regulations to move away from EU rules.
This included a strong endorsement of a regulatory review by Lord Jonathan Hill – the UK’s former EU commissioner.
Read more: UK government to create new unit to exploit ‘Brexit opportunities’
Hill’s recently unveiled a review for the government that called for a change in the UK’s stock listing regime and regulators to allow Special Purpose Acquisition Companies (Spacs) to register in London with the aim of maintain the city’s global competitiveness.
UK Minister for EU-EU Relations Lord David Frost said yesterday the city had to “fend for itself” after Brexit because equivalence is unlikely.
A spokesperson for the Treasury said: “The Chancellor has presented ambitious plans to consolidate the UK’s position as the world’s largest financial center – and we are pursuing them.
“We are moving quickly to strengthen the city’s competitiveness and have announced a series of new measures to Budget – such as new visa routes to attract the world’s best talent and plans to reform our listing rules and financial markets.”