Post-Brexit London can take on New York, says Hunt

Jeremy Hunt has vowed to help the City take on New York as the world’s preeminent financial centre with a raft of reforms aimed at restoring the appetite for risk across London.

Using new post-Brexit powers, the Chancellor unveiled details of the “Big Bang 2.0” that plans to loosen bank ring-fencing, relax rules on executive accountability, boost pension fund investment and reshape the Bank of England’s regulatory role.

The Chancellor announced more than 30 changes – more than a third of which were only possible because of Brexit – aimed at reestablishing the Square Mile’s competitive edge.

Mr Hunt told The Telegraph: “Our competition is not really with Paris or Frankfurt, it's with New York and Singapore and Shanghai. What this package of Edinburgh reforms demonstrates is that we aren't complacent.

“Our competition is with other financial centres and this is us showing that we are going to be nimble, adaptive, and hungry for business all over the world.”

Under the shake-up, the Government will consult on watering down ring-fencing rules separating banks’ retail and investment banking operations, including an increase to the threshold above which lenders must cordon off deposits.

Elsewhere, new remit letters were handed to the Bank of England’s Prudential Regulation Authority and Financial Conduct Authority instructing the regulators to focus on boosting the City's influence on the world stage.

The Chancellor will next year launch a review into overhauling the “senior managers’ regime”, which holds bankers personally responsible for rule-breaking on their watch with the threat of fines and even imprisonment.

The Government will also tailor rules on short-selling for the UK, reform EU rules that critics say force investment funds to provide consumers misleading information and spur investment from pension funds by changing the cap on performance fees.

Mr Hunt said the City had already “shown its mettle” by exceeding expectations in the wake of Brexit. But the Chancellor said he hopes to deliver “lots more” rule changes to boost the sector in the coming years and promised the “most innovative, forward looking regulation of anywhere in the world”.

He said: “Brexit makes some of the things that we've announced easier because we have regulatory autonomy so we are taking advantage of that to make sure the City is even more competitive.”

The regulatory overhaul is in addition to the scrapping of the bankers’ bonus cap and reforms to Solvency II, which hopes to spur investment by reducing the cash buffers insurers need to hold.

Although London remains the most important financial hub in Europe, it has seen some jobs and activity move to the Continent since Brexit. Last week Goldman Sachs shifted a small number of traders from London to Milan while Amsterdam has leapfrogged the City as Europe’s top share trading venue.

Mr Hunt played down concerns that Britain is unlearning the lessons of the financial crisis with the biggest overhaul since former Tory Chancellor Nigel Lawson’s initial “Big Bang”.

He said: “I wouldn't say this is as big in scale as the original Big Bang back in 1986.

“But it is the most significant set of reforms that we've had since then so it's something that we can be very proud of and very excited about."

It came as oil and gas industry bosses urged the Chancellor to amend the windfall tax on North Sea drilling, so that it falls away if oil and gas prices fall.

Senior executives from companies including Shell, BP and Equinor met with Mr Hunt in Edinburgh on Friday.

The Government has increased the tax rate on oil and gas companies twice this year, taking the overall rate 40pc to 75pc, to try and raise money to help households with rising fuel bills.

The measure is currently in place until 2028 but industry argues it is harmful to investment at a time of concern over energy security.

Industry sources said Mr Hunt asked the industry to provide further detail about how a “price floor” might be designed, in a sign he is prepared to consider the measure.

He is said to have told bosses the industry is “part of the solution” to the shift to greener energy, as their investment will be needed to develop new technologies such as hydrogen and carbon capture.