Rishi Sunak announces plan to bolster UK position as world-leading financial centre

LaToya Harding
·Contributor
·4 min read
Britain's chancellor of the exchequer Rishi Sunak. Photo: Henry Nicholls/Reuters
Britain's chancellor of the exchequer Rishi Sunak. Photo: Henry Nicholls/Reuters

Rishi Sunak has outlined plans to boost the UK’s position as a world-leading financial centre, and extend its leadership in green finance and financial technology.

In a statement to parliament on Monday, he unveiled that the UK’s first long term asset fund will be “up and running within a year,” and that from 2025 all “large companies and financial institutions across our economy” will have to disclose their carbon footprint.

He also plans to issue the UK’s first green gilts, subject to market conditions, to bolster the country’s status as a global financial hub and leader in carbon reduction.

“This will be the first in new issuances, as we look to build out a green curve over the coming years, helping to fund projects, to tackle climate change, finance much-needed infrastructure investment, and create green jobs across this country,” Sunak said.

In his first speech on financial services since becoming chancellor in February, he laid out the government’s ambitions for the financial services sector, including its approach to the equivalence process, as the UK builds its global role outside of the European Union.

Sunak said that it will give certainty on regulations after the leaving the Brexit transition period.

“I’m also publishing today a detailed framework for our approach to equivalence more generally. We will use equivalence when it is in the UK’s economic interest to do so,” he said.

He added that there was more opportunity to build more deeper financial services relationships with countries outside of the EU, including Switzerland, India and Japan.

READ MORE: London financial services jobs bounce back from COVID-19 slump

Sunak said: “Financial services will be essential to our economic recovery from coronavirus, creating jobs and growth right across our country. And as we leave the European Union and start a new chapter in the history of financial services in this country, we want to renew the UK’s position as the world’s preeminent financial sector.”

The chancellor also told MPs in the Commons that he plans to “accelerate the drive for net zero” ahead of COP26, the United Nations climate talks in 2021, in order for Britain to grow its green finance.

He added that the UK will “start, grow and invest” in fintech and stay at the cutting edge of payment technologies, announcing plans for a new consultation to make sure privately issued digital currencies "stable coins" meet the same high standards as other currencies.

Meanwhile, he said that the Bank of England and the Treasury was considering whether central banks could issue their own digital currencies “as a complement to cash.”

Watch: Brexit: Johnson insists EU deal is ‘there to be done’ as Barnier arrives for fresh talks

The financial services sector employs more than 1 million people across the UK and contributes to more than £137bn ($180bn) of value to the country’s economic output.

Two-thirds of people working within the financial services sector live outside of London, with half of all financial services exports also outside of the capital.

The Financial Conduct Authority (FCA) already announced on Monday that it will introduce new rules requiring the majority of listed companies to make better disclosures about how climate change affects their business.

The financial watchdog expects to launch reporting rules 1 January 2021.

The chancellor’s speech comes as the UK economy continues to battle the financial ruin caused by the coronavirus pandemic, as well as concerns over leaving the EU without a Brexit deal.

READ MORE: Pound wobbles as deadline to strike key Brexit issues looms

UK and EU negotiations have intensified in the last few months, with both London and Brussels continuing to disagree over fishing rights and a level playing field agreement, which is aimed at preventing unfair competition in areas including state subsidies.

Although talks resumed in London on Monday, as EU chief negotiator Michel Barnier and his UK counterpart David Frost came together to bridge their differences, the clock is ticking to reach an accord before next week.

The post-Brexit transition period ends on 31 December. If no agreement is made, trade will default to World Trade Organisation (WTO) rules. Businesses are hoping that the time pressure, alongside the COVID-19 factor, will focus efforts to try to avoid disruption when the deadline comes at the end of the year.

Rumours first circulated on the weekend, revealing that Sunak was seeking to overhaul UK public company listing rules to attract more high value tech “unicorns” to the London market post-Brexit.

The move would be a means to rival New York’s capital markets and would attract more high-growth companies to float in London.

Proposals under consideration include reducing the minimum “free float” requirement meaning companies would be able to retain more control of their companies upon listing. Allowing firms to have dual class share structures is also under consideration.

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