Mansion House Speeches 2015: What do the analysts think?

 
Sarah Hathaway
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George Osborne laid out plans for a new Budget surplus rule (Source: Getty)

Chancellor George Osborne and Bank of England Governor Mark Carney have both said their parts at the annual Mansion House speeches, but what do the analysts think?

New Budget surplus rule

John Cridland, director-general at CBI, says the budget plan will be good for businesses:
Business wants the Government to aim for an absolute budget balance over the economic cycle, so the Chancellor’s plans will be well-received. This will create a platform for the fiscal discipline required to keep national debt as a share of GDP on a downward trajectory and provide the flexibility to deal with economic shocks.
Underpinned by clear fiscal rules, we must get on top of the public finances in a way that is growth-friendly. The heavy lifting must come from savings to current spending so we need a step-change in the approach to public service reforms, while prioritising growth boosting spending, such as capital investment and innovation.

RBS share sell off

Cridland believes the fact RBS and Lloyds are ready to return to private ownership is a good thing:
RBS and Lloyds Banking Group are important players in the UK financial services sector for both businesses and individuals, and their long-term futures are best served in private ownership. It is a sign of strength for both banks that they are now ready to return to private ownership, and the approach to this should deliver a good result for the taxpayer.

Increase in jail terms

Alistair Graham, litigation partner at international law firm Mayer Brown, believes the change in prison sentence for those who break the law in the financial services sector will make little difference to actual practice:
The extension of the existing criminal sanctions for wrongdoing in the financial services sector follows the trend we have witnessed in past Mansion House speeches -‎ measures announced to appease the public that ultimately remain a fairly blunt instrument for prosecutors.
Increasing jail sentences from seven to ten ‎years and extending the reach of the Senior Managers' Regime appear to be a step in the right direction yet the reality is that the burden of proof for these crimes is high so naturally there are very few individuals who end up facing these sanctions.

Effective Markets Review

Edmund Parker, London head of finance at Mayer Brown, says care must be taken not to disrupt markets too much:
The recommendations in the Fair and Effective Markets Review are understandably robust, yet in implementing them ‎care must be taken that action to strengthen controls in financial markets does not harm London's competitive edge as the leading global centre for finance.
Factors such as a potential referendum on the UK's relationship with the EU already contribute to market uncertainty, and there is a concern that strong rhetoric from Osborne and Carney could further add to that.

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