Britain’s new finance minister on Tuesday set out how Britain would seize the “benefits of Brexit” by revoking EU laws, despite fears in some quarters over excessive deregulation in London.
Andrew Bailey, the governor of the Bank of England, meanwhile said that in the battle to control inflation, next month’s meeting on interest rates would not rule out a 50 basis point increase.
Nadhim Zahawi set out his plans in his first major speech as Chancellor of the Exchequer, at the annual Mansion House speech in the capital.
“The British people can rest assured that we are getting on and delivering the benefits of Brexit,” he said.
Zahawi, who replaced Rishi Sunak as finance minister earlier this month, set out his plans to “unleash growth across our financial services sector” and “unlock tens of billions of pounds of investment into the UK economy”.
The government announced it would set out planned legislation to “repeal hundreds of pieces of EU retained law” governing the finance sector.
They would be replaced with “an agile and coherent regime fit for the UK”, a finance ministry statement said.
“Consumers will remain protected, with legislation ensuring that victims of scams can be compensated while also acting to protect access to cash for the millions of people that rely on it,” said Zahawi.
‘We are not doomed’
The governor of the Bank of England set out his vision of monetary policy in his own speech at the Mansion House.
“We are not doomed, far from it,” said Bailey, reviewing Britain’s current economic problems. “But we are in difficult times.”
From a monetary perspective, the challenge of inflation was the largest in a quarter of a century, he said.
But he insisted: “Let me be quite clear, there are no ifs or buts in our commitment to the 2-percent inflation target. That’s our job, and that’s what we will do.”
And “a 50 basis point increase will be among the choices on the table when we next meet”, he added.
The chancellor’s Mansion House speech, given at the official residence of the Lord Mayor of the City of London, is habitually used by Britain’s finance ministers to set out major policy statements.
That means the markets will be closely following it, especially as critics of current government policy say that it has already gone too far in down the deregulation path.
Zahawi subscribes to the same view as his predecessor, Sunak—a candidate running to take over as prime minister from Boris Johnson—who had promised a new “Big Bang” in the finance sector after the deregulation of the 1980s.
Tackling inflation
On Tuesday, Zahawi confirmed that he was looking at measures to give the executive more powers to intervene in financial regulation, fuelling fears of a showdown with the Bank of England.
Bank of England officials including Bailey have defended the institution’s independence after criticism over being too timid in the fight against inflation.
UK inflation spiked in May to a 40-year peak of 9.1 percent, a level set to hit double figures this year.
Zahawi said that one of his priorities in the coming months would be to get inflation under control.
The new legislation the government is proposing would give the financial regulators more responsibility for setting the rules governing UK financial services.
And for the first time they would be given a secondary responsibility: to promote growth and competitivity in the sector, said the government.
But a parliamentary report in June warned against “any inappropriate weakening of the UK’s strong regulatory standards”, which could “reduce the financial resilience of the UK’s financial system and undermine international confidence in that system”.