Tonight I will welcome the Prime Minister, the Lord Chancellor, the Archbishop of Canterbury, the Chancellor of the Exchequer and guests from across the City – and beyond – to Guildhall for the annual Lord Mayor’s Banquet.
While the worst of the pandemic is behind us, we are facing the bleakest economic outlook that we have seen for many years, with the economy in recession, public finances severely stretched, and high inflation driving a cost-of-living crisis. The City of London is so much at the heart of the UK economy, that there is no way it can be immune to this situation.
There is no road to recovery that does not run through the City, and so our financial and professional services sector must do all we can to support the UK economy through this crisis.
The immediate challenge will be how we best serve people and businesses through this difficult period – how we can keep them afloat, alleviate the rising debt burdens people are facing and keep the economy moving. Now is the time for financial services firms and utility providers to demonstrate responsibility – by providing affordable credit to tide people through and where necessary to defer payments and waive insurance premiums.
But the longer-term challenge is how the financial and professional services sector can help the UK rediscover elusive economic growth. In the Autumn Statement, the Chancellor had a very tough task of trying to balance the books in a short timescale. Markets have been reassured for now following the turmoil at the end of September.
Nevertheless, the UK needs a longer-term plan. Successive governments have not done enough to update our national infrastructure and develop renewable energy supply and storage. The country will need long-term investment from government, and the right environment for private sector investment too. The reforms announced to the Solvency II regime are a step in the right direction. This reform will help to make the funding of long-dated loans easier – supporting both major infrastructure projects as well as the development of green technologies across the UK – but there is more that needs to happen to stimulate growth.
Money is short, but by mobilising private savings and pension funds, we can unleash the capital to boost the early-stage growth economy. To do this, we need to create a positive ecosystem for early-stage investment.
We have world-leading tech and scientific expertise here in the UK, often at the forefront of innovation. But far too often, we have failed to reap enough of the benefits here in the UK.
Many of our newest companies have for decades left our shores and been acquired by asset owners in other financial centres. We need our British companies to scale and to list here in London, so we need to make the UK a destination where high-growth businesses can access the investment they need at any stage of their journey.
This will require government to get behind business and entrepreneurs and dismantle barriers to entry into UK markets. We need to show these firms that we are serious about wanting them to grow and stay here, by implementing the reforms proposed by the UK Secondary Capital Raising Review, the UK Listings Review and the UK Fintech Review.
By backing innovation, creating the environment for firms to list and grow here, and being more bold and creative in how we invest in the early-stage growth economy, the City can drive the UK’s economic recovery and finance our future.