The government says new reforms unveiled in Leeds today will rewire the UK’s financial system and make it the number one destination for financial services businesses by 2035.
Chancellor Rachel Reeves unveiled the financial services growth and competitiveness sector plan, a key plank of Labour’s modern Industrial Strategy, at a summit of top finance executives.
The widest-ranging reforms to financial regulation in over a decade promise to attract inward investment and create skilled jobs across the UK.
Banks will send investment opportunities to savers with cash sitting in low-interest accounts for the first time, and major financial institutions – including high street banks – are backing an advertising campaign that will highlight the opportunities of investing for consumers who are able to do so.
Under current trends, moving £2,000 from these accounts to stocks and shares could make millions of people over £9,000 better off in 20 years’ time.
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“We fixed the public finances and stabilised the economy. Now we need to double down on our global strengths to put the UK ahead in the global race for financial businesses – creating good skilled jobs in every part of the country and helping savers’ money go further through our Plan for Change,” said Reeves.
The UK has the lowest level of retail investment among G7 countries, starving UK businesses of an important source of capital.
Stocks and shares have performed significantly better than cash savings accounts in recent decades. According to some industry estimates, more than 29m adults across the UK have cash sitting in a low-interest rate account offering around 1% – while the average return for stocks and shares over the last 10 years is around 9%.
Economic Secretary to the Treasury Emma Reynolds said: “Helping people take advantage of better returns from investing is key to better financial health, giving them a stake in a growing economy and connecting promising businesses with capital.
“These reforms will make the UK the best location for financial services firms and tear down barriers to investment to growing our economy and making families better off.”
Russ Shaw CBE, founder of Tech London Advocates and Global Tech Advocates, said the reforms marked a “significant and promising step towards tackling… limited access to domestic funding”.
Referencing the wider reforms, he explained: “This has been holding back innovators in the UK for at least a decade. By streamlining regulation and launching a dedicated concierge service to attract international businesses, the UK will make itself more attractive to global investors, while at the same time bolstering its own market.
“Crucially, the £25.6bn in funding via the British Business Bank, as previously mentioned in the Industrial Strategy, provides much-needed domestic capital to support business growth.
“The package also recognises the importance of talent in driving long-term success. A new Global Talent Taskforce aiming to attract top international expertise by funding 50 PhD students will be of particular benefit to our most cutting edge industries like ClimateTech and HealthTech, bringing much needed innovation and IP to the UK.
“This combination of regulatory reform, targeted investment, and strategic skills development sends a strong signal that the UK is serious about supporting its most dynamic sectors and reinforcing its position as a global hub for innovation and growth.”