Kate Andrews Kate Andrews

Will Hunt’s ‘Brexit freedoms’ kickstart Britain’s economy?

(Credit: Getty images)

Rishi Sunak’s government is trying to strike a difficult balance when it comes to discussing economic growth. On the one hand, there is broad consensus that the Liz Truss days (literally… just days) had to be dismantled to regain trust with the markets and retain the UK’s ability to keep borrowing at a stable price. On the other hand, there is recognition among ministers that the only way out of this high-tax spiral is to spur on some economic growth. In other words: achieve Truss’s goal while avoiding the many mistakes she made in her attempts to get there.

It’s in this context that we should look at today’s major financial services overhaul, dubbed the ‘Edinburgh reforms’, which Chancellor Jeremy Hunt is laying out in the Commons today. Roughly 30 regulatory reforms are being billed as ‘Brexit freedoms’ aimed at making the UK ‘one of the most open, dynamic and competitive financial services hubs’ for business. 

Will the reforms deliver what’s being sold? It’s certainly a big exercise in cutting red tape

Will the reforms deliver what’s being sold? It’s certainly a big exercise in cutting red tape and, perhaps more controversially, a nod to those who have been arguing that government over-corrected for the 2008 financial crash with punitive and anti-growth measures. As far as financial services reforms go, this is a big overhaul: the ‘repealing and replacing’ of Solvency II, a technical piece of insurance regulation, became a frequent talking point for Brexiteers, who used it as an example of what could be achieved outside of the European Union. This is now set to take place, and it’s a move that the Treasury expects will unlock ‘£100 billion of private investment’ which could be reinvested into UK infrastructure projects: a way to get building and to spur on growth through private sector investment, rather than more taxpayer funds.

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