‘Red tape’ is a revealing concept. To some, it represents bureaucracy (ideally of the foreign kind) ‘gone mad’. Think Brussels directives on the correct angle of a banana – a myth based on EU Commission Regulation No 2257/94 on standards for bananas.
To others, it is a misleading term for fundamental workers’ rights, consumer protections and environmental laws. Things people rather like. So my ears pricked up on the announcement today by the chancellor that he was going to cut red tape and axe EU rules as part of a major banking overhaul.
The so-called “Edinburgh Reforms”, a sweeping package containing more than 30 elements, is aimed at boosting the UK’s financial services sector and flagging economy more widely. Reforms include reviewing accountability rules for bankers, easing capital requirements for smaller lenders as well as repealing a series of laws left over from EU membership.
Get your bingo cards at the ready, the Treasury press release has all the catchphrases you might expect. The plan will help “turbocharge growth”, “seize on our Brexit freedoms”, and “unlock growth and opportunity in towns and cities across the UK.”
This all sounds terrific, surely such a growth-oriented government is streets ahead in the polls and presiding over an economy expanding at a record clip?
Health warning: this is not to say that these reforms are the first stage in precipitating the next banking collapse. The reality is that UK institutions are in vastly better shape than they were prior to the financial crisis, and are stress tested from here to next Tuesday to ensure that they won’t go under if house prices fall 20 per cent or in the event of a gentle breeze.
But that’s not to say that these changes will revolutionise the financial sector either. For one, it is not clear that the banks themselves were calling for this, at least not publicly. Nor could one say that the banking system is broken and in need of fixing. UK financial regulation is considered to be some of the best in the world. It is a strength, not a weakness.
The Standard’s Financial Editor, Simon English, sums it up thus: “What Hunt and co believe, as a matter of ideology not practicality, is that regulations get in the way of business being done.” Read his column here for his take on the day’s events.
Politically, however, these changes tell us a couple of things. First, that the Rishi Sunak administration, like the previous two, is desperate to point to some benefits of Brexit. Though UK banks may have preferred the old days when financial services trade with the EU was based on ‘passporting’, which allowed for firms to trade across borders with minimal regulatory permissions.
Second, it is the end of any pretence that, post-2008, Britain was looking to pivot its economy away from a reliance on financial services and towards *gestures wildly* something else, be that manufacturing, AI, life sciences or other professional services.
Britain’s economic model, largely based on EU membership and financial services, has been shaken in the last 15 years. Productivity growth has still not recovered from the crash. It is far from clear that today’s package represents the big bang every chancellor since Nigel Lawson has yearned to repeat.
Elsewhere in the paper, Simon Hunt has taken a short break from the tech beat to reveal something much more important: London’s priciest (and cheapest) places to buy a pint, including a nifty interactive map I just know you’ll all appreciate.
In the comment pages, Emily Sheffield compares the Harry and Meghan story not to a summer’s day but a carefully curated Instagram feed. While Paul Flynn says satires like White Lotus backfire, because they make us want to be rich too.
And finally, fine dining? “Makes me want to lie on the floor and weep.” Cheese? “All of them.” Soraya Gaied Chortane chats to Nigella about, well, life.
Have a lovely weekend.
