LONDON’S BUSINESS NEWSPAPER
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BREXIT CITY SHAKEUP TO BE UNVEILED
FRIDAY 9 DECEMBER 2022
ISSUE 3,906
‘EDINBURGH REFORMS’ TO REWRITE SQUARE MILE RULES STEFAN BOSCIA, JACK BARNETT AND CHARLIE CONCHIE JEREMY Hunt will finally unveil the government’s plans to shred EU financial services laws today as he proposes a package to boost the City’s global competitiveness post-Brexit. Hunt will deliver the landmark announcement in Edinburgh this morning, with the chancellor set to drop Solvency II capital requirements on insurance firms and ease current bank ringfencing laws. The Treasury last night said more than 30 regulations would be changed as a part of the package, now dubbed the “Edinburgh reforms”, which Hunt said would “unleash the full potential of our formidable financial services sector”. The so-called Big Bang 2.0 proposals – a phrase first coined by Rishi Sunak in a City A.M. interview nearly two years ago – have long
been touted as one of the biggest potential benefits of Brexit. “We are delivering an agile, proportionate and home-grown regulatory regime which will unlock investment across our economy to deliver jobs and opportunity for the British people,” Hunt will say. It is also expected that the chancellor will announce a review of the EU’s wide-ranging MiFID II regulatory regime. Hunt will also today set out plans to reshape the UK banking regime in a bid to unshackle the sector after the government tightened rules to prevent mistakes that led to the financial crisis from happening again in the future. Lenders will be able to link their investment and retail banking arms, Hunt will say, though it is unclear whether big players such as Barclays and HSBC will still need to partially separate, or “ring fence”, the two. The policy was designed to
stop investment errors from trickling down to the real economy, as they did over a decade ago, via consumer banking businesses. Critics have argued it has kept cash locked up in the financial system that could have been unleashed to boost business investment and economic growth. Hunt is set to overhaul the purpose of the City’s regulators in a bid to push growth and competitiveness up the agenda, with new mandates for both the Financial Conduct Authority and Prudential Regulation Authority to be detailed as part of the package. Suggestion of a shake-up of the City regulators has caused some disquiet in recent months amid fears the UK’s status as a global financial hub will be threatened. David Postings, the chief exec of trade body UK Finance, told City A.M. last night: “The banking and finance industry is the engine of our economy, delivering jobs and investment up and down the country.”
HEATH-ROW Airlines hit back at regulator price cap decision ILARIA GRASSO MACOLA VIRGIN ATLANTIC accused Heathrow bosses of producing “undercooked and self-serving passenger forecasts” in order to justify an “excessive” passenger charge next year. Yesterday the aviation regulator, the Civil Aviation Authority (CAA), capped Heathrow’s passenger fee at an interim level of £31.57, based on 65.2m passengers using the airport – compared to an estimated 62m this year. Carriers have argued the figure is excessive and will inflate ticket prices. Virgin Atlantic said it was “almost
inconceivable” that Heathrow would not see a more significant bump next year, with the first quarter of the year disrupted by ‘Omicron’ restrictions. A spokesperson said Heathrow was waiting for a final decision, while continuing to believe “in the strong plans we have put for investing in... services over the coming year”. The CAA will consult on the fee over the coming fortnight. The charge is paid by airlines, but is typically passed on to customers. Weiss’ comments were echoed by IAG’s chief exec Luis Gallego as well as trade body boss Willie Walsh, who called the decision “frustrating”.
Legal eagle Sir Nigel says Big Four will drive more competition in sector LOUIS GOSS THE BIG Four’s efforts to bolster their legal businesses could lead to a surge in the number of UK law firms listing on the stock exchange, DWF chief Sir Nigel Knowles told City A.M. EY’s global split could see the firm
become an “aggressive” legal services behemoth, as it is freed from the conflict-of-interest rules that block the Big Four from selling advice to audit clients, said Knowles. The Big Four accounting firm’s rise as a legal services powerhouse could in turn heighten competition in the legal sector, in a shift that
could see more UK law firms follow in DWF’s footsteps by launching initial public offerings (IPOs). “There’ll be more firms that IPO,” Knowles (right) said, claiming the legal sector is set to see “more competition from the Big Four”. The push could see law firms seek to raise capital on public
markets in their efforts to capture a larger share of the world’s £650bn legal market and compete with the likes of EY, KPMG and Deloitte. Knowles explained that the hundreds of private law firms that currently make
up the UK’s legal sector will struggle to compete with the Big Four, unless they either find a niche, or expand their offerings and global reach. Only six UK law firms, including DWF, have ever successfully completed a public float. In June, London firm Mishcon de Reya put its own IPO plans on hold.
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