Liz Truss believes the City is the “best growth engine in the UK” and is preparing to lean on the financial sector to achieve her political agenda, a former minister said today.
Gerry Grimstone, the investment minister under Boris Johnson who has worked with closely with Truss in cabinet roles, said that the newly appointed prime minister was a champion of the Square Mile and understood its importance to the UK economy.
“For the first time we’ve got a PM in palace who has a feel for the city and understands it, but also feels she needs the City to fulfil her objectives,” he told Bloomberg’s In the City podcast.
“She has a very, very clear view that probably the best growth engine in the UK is the City, and that is not words we have heard from a politician in recent year.”
Grimstone’s comments come after then-prospective PM Truss told City A.M. in August she was looking to “empower the City to drive economic growth” through tax cuts and regulatory reform.
Chancellor Kwasi Kwarteng yesterday doubled down on the commitment to slash red tape when he met with top banking and insurance chiefs, telling them the government planned to usher in a “Big Bang 2.0” – a reference to Margaret Thatcher’s deregulation drive in the 1980s.
Ministers have also been looking to shift growth and competition up the agenda for the top financial watchdogs in order to boost their accountability to Government.
In the second reading of the government’s landmark Financial Services and Markets Bill yesterday, City Minister Richard Fuller said ministers would press ahead with plans to grant government intervention powers, allowing them to ‘call in and overrule decisions it deems to be in the public interest.
Grimstone said today a change in tack was needed by regulators in the UK who had lost sight of growth and been bogged down by a focus on consumer protection.
“I have huge respect for the FCA, but many people would say it’s not been doing its job in the way that it should over the last two or three years. I think it’s lost its way a little bit,” he said.
“Consumer protection is vital to any market but you don’t want to create that by stultifying markets so they can’t do their job.”
Truss is reportedly eyeing a major overhaul of the City’s watchdogs in a bid to boost growth, with a merger of the main City regulators reportedly under consideration.
A spokesperson for the Financial Conduct Authority said London was trusted “the world over by companies looking to raise capital and investors” which was is underpinned by “strong standards and a world-leading concentration of buyers, sellers and advisers.”
“Last year was the best year for raising investment for listed companies since 2007, and with £16.9 billion raised in UK Initial Public Offerings (IPOs) including 126 companies listing on the London Stock Exchange,” the spokesperson said.
“We continue to review our rules to ensure they deliver highly competitive, efficient, innovative, smartly regulated, trusted markets. Immediately after leaving the European Union, we implemented the most radical reforms of our capital markets in two decades, supporting UK competitiveness and we are ready to take advantage of new powers to tailor our rules for Britain as soon as legislation is passed.”