CityAM covers my strategy report
Westminster must stop City of London 'neglect', says ex-Johnson adviser
Dr Gerard Lyons, who worked for Johnson while he was mayor of London, said the EU was "seeking to undermine the position" of the UK's financial services sector post-Brexit. (Getty Images)
The government must stop its “policy of benign neglect” toward the City of London and urgently bring in financial services regulation reforms, according to Boris Johnson’s former economic adviser.
In a report released by centre-right think tank Policy Exchange, Dr Gerard Lyons called for a strong stance on parting from the EU’s financial services regulations post-Brexit.
This includes calls for a review of capital requirements of small to medium sized banks to “boost bank lending to the regions”, re-establishing the City’s “expertise in research” by rolling back EU regulation in this area and creating a new parliamentary committee on financial services
Lyons, who worked for Johnson while he was mayor of London, said the EU was “seeking to undermine the position” of the UK’s financial services sector post-Brexit.
“The City often prefers it when politics stays well away, but circumstances have changed,” he said.
“In the face of an aggressive EU and intense global competition, the City needs a Government that is prepared to go into battle for it.”
UK financial firms lost their wide ranging access to EU markets when the Brexit transition period ended on 31 December and now have to navigate a patchwork of regulations from individual member states.
The only way the City of London can regain its pre-Brexit access to the EU is if Brussels unilaterally grants the UK equivalence, however the bloc believes the UK government is destined to diverge from its financial services regulations and has withheld the designation. European leaders like Emmanuel Macron have made it clear that they see Brexit as an opportunity to steal London’s crown as the continent’s financial capital.
Lyons said London was an attractive city for the global financial services industry due to its regulatory environment and its infrastructure that attracts big deals.
He said there needed to be government action to ensure clearing houses stay in London, along with investment into more data centres.
“There is a need to assess the resilience of the UK financial eco-system and not take anything for granted,” he said.
Chancellor Rishi Sunak indicated earlier this year that he was open to a change in financial services regulations to pivot from the EU’s rules.
This included a strong endorsement of a regulatory review by Lord Jonathan Hill – the UK’s former European Commissioner.
Hill’s recently unveiled a review for the government that called for a change the UK’s share listing regime and for regulators to allow Special Purpose Acquisition Companies (Spacs) to list in London in a bid to maintain the City’s global competitiveness.
UK-EU relations minister Lord David Frost said yesterday the City needs to “needs to get on and do its own thing” post-Brexit as equivalence is unlikely. A Treasury spokesperson said: “The chancellor has set out ambitious plans to cement the UK’s position as the world’s leading financial centre – and we’re getting on with them.
“We’re moving quickly to boost the competitiveness of the City and announced a series of new measures at Budget – like new visa routes to attract the best global talent and plans to reform to our listing and capital markets rules.”