Overview
Yesterday, Rachel Reeves delivered her second annual Mansion House Dinner speech to representatives from the City of London’s financial services sector—just two weeks since her tearful appearance on the Frontbench of the Commons the morning after a key government bill had been gutted by its own backbenchers.
That day the City saved the Chancellor, with the bond markets showing just how important fiscal constraints to government spending are and the value of maintaining a Chancellor deemed prudent. Yesterday was not just a moment for a political rebound, but also a day for a blizzard of reforms.
Many of these policy changes came in the form of the government’s new Financial Services Growth and Competitiveness Strategy (2035), otherwise known as the “Leeds Reforms.”
Much of the speech emphasized announcements which could already be found in the comprehensive 76-page Strategy, summarized below. Some notable omissions were mortgages, with reforms in that area announced separately by financial services regulator the FCA—confirming that loan-to-value ratios would be increased to 4.5 times a buyer’s salary and thereby widening access to Nationwide’s “Helping Hand” mortgage for first-time buyers.
Also notable for its omission was a rumored change to incentives to save into a cash individual savings account (ISA). This had been campaigned against by parts of the media and the investment industry alike on the basis that rather than encouraging people to invest they would be more likely to hold cash in a less tax-efficient structure.
Finally, despite hopes we would learn more about further planned pensions reforms, neither the speech nor the strategy addressed this.
Financial Services Growth & Competitiveness Strategy: Key Policy Announcements
The new strategy sets out a long-term vision to re-establish the UK as the global destination of choice for financial services firms by 2035. It can be seen as a response to stagnating economic growth, a moribund UK IPO market, as well as rising international competition among financial centers. The strategy therefore focuses on unlocking capital, boosting innovation, and enhancing global competitiveness.
Key Objectives: For the UK to become the global hub for financial services investment, innovation, and growth; double the average growth rate of net financial services exports; and strengthen regional financial services clusters by 2035.
Six Core Pillars
1. Delivering a Competitive Regulatory Environment: Includes faster regulatory approvals, streamlined regulation, bank capital framework reform, ringfencing regime review, and support for innovation.
- Faster authorizations: FCA and PRA deadlines for firm approvals cut by up to 33%
- Streamlined compliance: Major reforms to the Senior Managers & Certification Regime and Financial Ombudsman Service
- Capital efficiency: Tailored Basel 3.1 implementation and MREL reforms to free up capital for productive investment
- Ringfencing review: Potential to unlock new commercial banking opportunities.
2. Harnessing the UK’s Global Leadership: Covers bilateral trade and investment agreements, concierge services for international firms, and transition finance.
- Berne Financial Services Agreement: Mutual recognition with Switzerland sets a precedent for future deals
- Office for Investment: Financial Services—New concierge support for international firms entering the UK
- Emerging market focus: Strategic dialogues with India, China, and the Gulf to open up capital markets and insurance sector opportunities
- No UK Green Taxonomy: Shift of focus to transition finance and voluntary carbon markets
- ESG ratings providers regulation: New framework to improve transparency and reduce greenwashing
- British Business Bank: GBP 4 billion of additional capital for clean energy and IS-8 (eight priority growth) sectors.
3. Embracing Innovation and Leveraging Fintech Leadership: Establishes a Scale-Up Unit, promotes AI and digital identity adoption, pledges to advance Open Finance, and covers reforms to payments including exploring a digital pound.
- Scale-Up Unit: FCA and PRA to support high-growth Fintechs with tailored regulatory engagement
- Open Finance roadmap: Smart Data Accelerator and digital ID rollout to improve customer onboarding and AML compliance
- Payments reform: Stablecoin regulation, Distributed Ledger Technology-based settlement, and digital pound exploration.
4. Building a Retail Investment Culture: Reforms advice and guidance, includes Long-Term Asset Funds in ISAs, reforms capital markets and pensions to unlock investment.
- ISA reform: Long-Term Asset Funds (LTAFs) to be included in Stocks & Shares ISAs from April 2026
- PISCES exchange: New private markets platform to support scale-up capital
- Prospectus and listing reforms: Simplified rules to attract IPOs and secondary listings.
5. Skills and Talent: Expands visa schemes, launches a Global Talent Taskforce, introduces a Skills Compact, develops an AI skills strategy, and promotes flexible training.
- Visa liberalization: Expanded Global Talent and High Potential Individual routes
- AI skills strategy: Sector-wide upskilling to support digital transformation
- Diversity targets: Renewed push for gender parity and inclusive hiring.
6. Regional Growth and Clusters: Identifies 11 financial services clusters across the UK to unlock economic potential via infrastructure investment and innovation programs.
- Infrastructure investment: GBP 15.6 billion for transport upgrades (e.g. TransPennine, HS2, metro extensions) to improve connectivity
- Targeted support: Office for Investment: Financial Services and British Business Bank’s Cluster Champions to promote regional investment
- Innovation & talent: GBP 187 million TechFirst program and FCA’s Sprint initiative to boost Fintech and AI capabilities in clusters
- Case study: Glasgow’s International Financial Services District is hailed as a successful public-private collaboration, attracting major firms like Barclays and J.P. Morgan.
Implementation and Monitoring: Annual progress reports will track metrics such as export growth, productivity, household investment, and regional Gross Value Add growth.
Investor Reaction
“This isn’t a return to a ‘big bang’ moment, but rather a large number of incremental changes aimed at unlocking long-term growth,” noted Mike Coop, CIO, EMEA, at Morningstar Wealth.
“The rollback of limits, easing of restrictions, and encouragement of personal investment will no doubt come as a boost for banks, insurers, wealth, and asset managers,” he added. “These changes signal a clear shift away from the tight controls and risk-averse philosophy that have defined the post-2008 era.”
Ben Wright, Co-Head of UK Investment Banking at Berenberg, observed that “recently, we’ve placed too much reliance on the Mansion House speech to deliver a silver bullet.”
“Realistically, there is no single measure that will instantly drive a flood of London listings or a wholesale re-rating of the market, but the action announced by the FCA to cut listing costs and the Treasury’s ongoing efforts to reduce red tape are genuinely meaningful. By systematically removing these barriers, the government and regulators are taking tangible steps toward unlocking the market’s potential.”
Sharing his views in an op-ed for Financial News prior to the new financial services strategy being released, Matthew Beesley, Chief Executive of Jupiter Asset Management, called for reforms to daily pricing—to allow investors greater access to an “illiquidity premium” through public markets funds within an ISA wrapper.
According to Beesley, reaping the benefits of long-term investing need not be restricted to those willing to invest in private markets—whereas the Treasury decided to only include LTAFs in ISAs as part of the latest reforms.
Finally, The Pensions Management Institute (PMI) noted its disappointment that the Chancellor failed to mention Phase 2 of the Pensions Review. “We must break down product silos and build a lifetime savings framework that reflects how people actually live—balancing pensions, ISAs, housing, and emergency savings,” said Helen Forrest Hall, PMI’s Chief Strategy Officer.
Political Implications
Westminster journalists relentlessly focus on the ups and downs of Cabinet popularity and the definitions of what a “working person” is in the context of pre-election commitments. Is it too much to say that they are all wrong? It is at least plausible to say that the Westminster Lobby has massively missed the Chancellor’s point.
The latest measures are a significant rollback of the framework put in place after the Financial Crisis and a step forward to encourage proportionate risk-taking by regulators, consumers, and firms. Most importantly, they are a recognition by a Labour Chancellor that the UK is reliant on effective financial services to support the wider economy.
The Chancellor has been incredibly consistent in this before and since the election. These measures are an iterative step forward on work begun by Jeremy Hunt and accelerated by her. The risk-averse culture of “steady as she goes” from the regulators is being turned around—no longer tolerated by politicians across the House.
The political question is whether this will make enough of a difference. It is clearly an essential part of the government’s wider reform agenda, including planning reform, infrastructure, and industrial strategies. These all need financing. But the fiscal challenges the Chancellor faces are huge. In the Autumn Budget, she is going to have to confront the government’s short-term financing needs—inevitably through higher taxes—against the need to boost the economy’s long-run productivity and growth.
Delivering her long-run plan for reform of the economic wiring is, in many ways, the easier part for the Chancellor. Sitting in Mansion House last night, she was the only person who also had to think about the political challenge of getting Labour MPs to vote for difficult decisions to balance the books. That’s the really hard bit.
Materials presented by Edelman’s Public & Government Affairs experts. For additional information, reach out to Luisa.Porritt@EdelmanSmithfield.com or Wes.Ball@Edelman.com
