Why Truss must focus on the City to rescue the economy

David Postings is CEO of UK Finance

As Liz Truss prepares for her first Conservative Party convention as Prime Minister, she is faced with an overflowing inbox.

She took office at a time of profound economic uncertainty as the country faces cost pressures of rising inflation, interest rates and energy costs.

Alongside the many challenges we face, now that we are outside the EU, there is an opportunity to make our own rules, changes that could enable economic growth and investment. In addition to immediate cost-of-living support, the country needs a plan that will make it one of the most attractive places in the world to do business and achieve long-term growth.

The UK financial services sector is key here. It is a global export and boosts jobs, investment and growth across the country. The sector accounts for 10% of economic output and employs over a million people, two thirds of whom work outside of London.

To ensure the UK maximizes the benefits of a world-leading financial services sector, we urge the new Prime Minister and her Chancellor to focus on the following.

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Support the Financial Services and Markets Act to get it through Parliament as soon as possible

The bill represents a unique opportunity to improve regulation, improve consumer protection and create a more competitive financial services sector. A new secondary competition target for regulators will signal to the world that the UK is open to business. When the bill was debated in Parliament the other day, it was great to hear both government and opposition speak out about the important role the sector plays in the UK and the need to support its growth.

Address our uncompetitive tax system

The banking and finance industry is currently taxed more heavily than other sectors and significantly more than its global competitors. We know that companies have choices about where to invest and grow their business and changes here would encourage international investment in the UK, leading to more employment in high quality jobs and having a positive impact on government revenues.

Deal with the rapid growth of scams and scams

This requires a coordinated approach. In 2021, the banking and financial sector prevented £1.4bn from falling into the hands of criminals, but more can be done, including through legislation.

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The new government should present the expected economic crime law and the second economic crime plan as soon as possible. These focus on curbing money laundering by organized criminals and corrupt oligarchs and preventing fraud at source.

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We also need to see the Online Safety Act relaunched – online fraud is the most prevalent type of white-collar crime today and so the new government should ensure consumers are protected from online fraud.

Take the lead and show ambition in the transition to net zero

The energy cost crisis we are facing just reminds us how urgently we need to switch to a more sustainable system. The UK banking and finance industry is committed to net zero targets and recognizes the critical role it must play to achieve a just transition to a green economy. T

This requires an enabling policy environment, facilitated by bold government action, as we need to ensure the transition is successful and does not have an adverse impact on the most vulnerable in society.

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Take advantage of the fact that financial services are one of the UK’s top exports

Although it is often easier to think about trade in goods, the country earns most from services and we need a comprehensive strategy that makes financial services a priority in trade deals and improves access to other financial services markets. At the same time, the UK should maintain market access for overseas companies while opposing measures restricting UK companies’ access to the EU market.

The new Prime Minister has rightly said that the financial services sector is a “jewel in the crown of the UK economy”. The sector stands ready to support you and your government in addressing the challenges the country is facing and helping to maximize the opportunities available to us.

By taking action to allow the financial services industry to thrive, there will be benefits for the whole country.

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