It may be a transparent nod to the geographical spread of the UK’s financial services industry, but the fact the Chancellor is delivering his thesis on the country’s post-Brexit regulatory regime north of the border is worth noting. The phrase Big Bang 2.0 has been ditched – it’s now the Edinburgh Reforms – but the potential for a regulatory rewrite to unleash growth across the country is not to be sniffed at.
By the end of the year we’ll have a sense of just how transformative these reforms will be, once lawyers and regulators have a chance to offer their view of the detail. No doubt many will claim that this deregulatory initiative does not go far enough.
It’s worth remembering however that the first ‘Big Bang’ was not exclusively a question of deregulation – it was about a smarter rulebook, not necessarily a smaller one, and a host of other factors from the ripping up of old school ties to the rapid digitalisation and technological advances of financial services, as the journalist Iain Martin has written engagingly in his book Crash, Bang, Wallop.
In truth – in a more interconnected financial world than we saw even as recently as the 1980s – the City needs not a revolution but an evolution. Where the UK is to differ dramatically from other regimes, it should do so in such a way that the benefits are so apparent as to negate the potential downsides of difficulties around regulatory alignment. That is not an argument for the status quo – far from it – but it is a call to focus on the obvious wins rather than trying to rip up the entire thing to make a point.
The Chancellor is in Edinburgh because he cannot be seen to deliver a speech to the City about the City, especially when the City’s myriad critics need little opportunity to launch attacks on imagined cronyism. But as the engine of the country’s growth, it is the City that Jeremy Hunt and Rishi Sunak are relying on to drive economic growth. A more intelligent rulebook could put some more power under the bonnet.