The British government puts in a big financial move! Large-scale deregulation will improve the competitiveness of the industry
December 10 Financial Associated Press News (Editor Zhao Hao)On Friday (December 9), local time, the British government announced a package of financial regulation reform plans, saying more than 30 programs will reduce unnecessary regulation, improve the competitiveness of the sector and accelerate future economic growth.
Taken together, the proposals include changes to the rules governing short selling, how companies go public, the financial statements of insurance companies and real estate investment trusts (REITs), as well as the repeal of some old rules introduced when Britain was trying to join the European Union.
Additionally, the UK government is expected to update its green finance strategy in 2023 and bring ESG rating providers into the regulatory arena for consultation in Q1 next year. In addition to this, the government will also be holding consultations with the Bank of England on a central bank digital currency in the coming weeks.
UK Chancellor of the Exchequer Jeremy Hunt called the package the “Edinburgh Reform”, with the aim of making the UK the most open, dynamic and competitive global financial center in the world.
Hunt said Edinburgh Reform provides a flexible local regulatory system for the UK after Brexit, which is in the interest of the British people and British companies.
Hunt added that the UK government would amend or abolish hundreds of pages of EU financial services regulation laws: “We will go further and reform cumbersome EU laws that hamper the growth of industries like digital technology.”
Deregulation is controversial
There is a growing perception that Britain is less competitive financially due to Brexit. Researchers from the London School of Economics also pointed out earlier this year that financial services in the UK would be among the sectors hardest hit by Brexit. This has made attracting foreign investment and promoting economic growth a top priority for the government.
However, some voices believe that the “Edinburgh reform” could carry financial risks. Labor MP Tulip Siddiq wrote on social media that ‘race to the bottom’ reforms would lead to more financial instability.
The race to the bottom refers to the deregulation of the business environment and the reduction of tax rates by the government, with the aim of increasing the economic vitality and investment attractiveness of the respective countries or regions.
Even John Vickers, the former chairman of the Independent Commission on Banks (ICB), warned in an open letter that special treatment for the financial services sector would instead harm it, as it did 15 years ago, during the 2007 financial crisis. /08.
In response, Hunt said: “We won’t forget the lessons of 2008, but at the same time we must recognize that banks’ balance sheets are much stronger today than they were then.”
