City raises a glass to Reeves’ reforms
The City may have been a bit damp and grey yesterday but the Chancellor appeared as a welcome ray of sunshine. At City PM, we haven’t held back in our criticism of this government’s economic policies – and we’ll return to that theme before long, I’m sure – but we also believe in giving credit where it’s due.
Yesterday, Rachel Reeves unveiled a string of constructive, forward-looking policies that could (and should) have been introduced by any of her Conservative predecessors. That’s not to say the measures are right-wing; they’re just sensible, and overdue.
Reforming the rules around the provision of financial advice is a no-brainer, and opens the door to wider reforms around encouraging and supporting retail investing, an initiative that has the potential to incubate a much needed change of culture in this country.
Efforts to cut back some of the post-2008 regulations are also welcome.
In reaction to these sweeping reforms, some people have asked “isn’t this all a bit risky?”
That very question was put to the FCA on Monday when, in response to the government’s call for some pro-growth reforms, they announced changes to capital raising rules. Their response was admirably clear: “yes.” And that’s the point.
Risk-aversion has held sway for too long
The same goes with changes to mortgage affordability rules; making mortgages more accessible could mean some homeowners get into difficulty in the future if circumstances change, but risk-aversion has held sway for too long and a modest recalibration has to be a vital part of the quest for growth.
The Lord Mayor made rediscovering an appetite for risk a core part of his term in office, and he deserves credit for helping to move the debate in the right direction over recent months.
At this point, I feel I shouldn’t allow myself to get too carried away. There is more the Chancellor could have done, such as lifting the tax on share trading, and there are things she may yet do that could jeopardise the success of the changes she’s announced, such as increasing the corporation tax surcharge on banks or, God help us, cooking up a wealth tax.
Our economy is far from safe and its future is far from certain, as the head of the OBR made clear yesterday.
But for one night at least, I was pleased to be able to raise a glass at the Mansion House in support of some welcome good news – and good ideas – from this government.