Chancellor Jeremy Hunt has unveiled a strategic plan to outmaneuver the European Union (EU) and secure a significant victory for the City of London in the £2.4tn market.
The plan involves leveraging the autonomy gained through Brexit to rely on the UK’s own regulators, positioning the country as a leader in the “industries of the future.”
The Treasury has outlined its intentions to overturn EU laws inherited by the UK in order to enhance competitiveness. One such plan involves lifting the ban on betting against sovereign debt, which was imposed by the EU.
Additionally, the requirement to disclose substantial short positions in gilts to the regulator will also be overturned. The Treasury argues that these reforms will bolster liquidity in the £2.4tn gilt market.
In an industry consultation launched recently, the Treasury stated that short selling of sovereign debt and owning sovereign credit default swaps (CDS) contribute to the healthy functioning of sovereign debt markets, promoting liquidity and facilitating price discovery.
These changes are part of a broader effort to relax financial regulations inherited from the EU post-Brexit, aimed at improving the competitiveness of the City of London. The reforms have been labeled the “Edinburgh reforms.”
During his annual Mansion House speech, Chancellor Jeremy Hunt emphasized the UK’s plan to eliminate nearly 100 unnecessary retained EU laws.
He highlighted the newfound autonomy provided by Brexit, enabling the UK to rely on its own regulators and position itself as a leader in the industries of the future.
Hunt expressed confidence in the UK’s robust regulatory regime and its world-class regulators. He emphasized that Brexit offers an opportunity to harness their expertise even more effectively as the country strives to lead in emerging industries.
The recently passed Financial Services and Markets Act was cited as a landmark piece of legislation that ensures regulators prioritize growth and competitiveness alongside their wider responsibilities.
Furthermore, Hunt announced the initiation of the repeal process for almost 100 unnecessary retained EU laws, streamlining the regulatory framework while maintaining high standards.
He highlighted the signing of a new UK-EU financial services Memorandum of Understanding, signifying the development of a new relationship with European partners.
Collaboration with the Bank of England was also emphasized to ensure the UK establishes robust mechanisms to enhance continuity of access to deposits in the event of bank failures, even for non-systemically important institutions, building on lessons learned from recent events.