In a post-Brexit Britain that has seen its financial sector weakened in the past year or so, one British financial services body has called for major reforms to rebuild the UK’s status as the world’s leading international centre.
TheCityUK, an industrial advocacy group for professional and financial services proposed strategies to attract global talent through cheaper and faster immigration gateways. The body has stated that “industry, government and regulators must cooperate with the aim of deepening trade links, boosting long term competitiveness and seeking crucial areas of future growth.”
The UK must reduce taxes on banks whilst creating simpler visas for internationals according to TheCityUK. The group also highlighted crucial areas in which London could develop an advantage such as risk management, fintech, and data. According to the advocacy group, the fastest way to boost the industry will be through deals with international regulators and cross-border recognition.
British Decline
According to a leading financial survey, the UK lost its top ranking to the United States in 2018. Since then, New York has continued its dominance in the stock market. Some have argued that leaving the European Union shut off the UK to its largest customer base and this has only increased pressure on London. Almost €8 billion a day of EU equities trading immediately moved to Paris and Amsterdam following Britain’s exit from the EU back in January.
In response to TheCityUK, financial services minister John Glen shared similar ambitions arguing that competitiveness is at the core of the government’s plan to revive the financial sector. Glen further iterated that leaving the EU offered clear opportunities.
Currently, the tax rate for a bank in London is set at 46.5% compared to the 33.5% of a New York bank. According to TheCityUK, Britain’s global share of cross-border bank lending fell to 15.2% compared to the 17.8% of 2010, while hedge fund assets dropped more than 6%.
How has the UK reacted to Brexit?
Despite the report, it’s not to say that the UK hasn’t made efforts to improve and regain its global standing in the financial services industry. For example, British regulators are in the process of revising listing rules so that it will be easier for companies to join London stock markets in the future.
Among the proposed changes by the UK government are scrapping EU caps on the amount of trading private investors are allowed to engage in private marketplaces, while the UK treasury aims to change insurance industry regulation due to over-rigidity. However, the post-Brexit trade deal with the EU neglected the financial services industry.
British attempts at equivalence have failed so far and without such agreements, the UK will be unable to access certain activities and services within European markets. While the UK has granted EU financial services access to London markets, the EU has been less reciprocal.
