Advocates of Britain’s exit from the European Union presented it as an opportunity to sweep aside unnecessary rules and regulations that were holding back economic growth. Key to this is a plan to replicate the “Big Bang,” the wave of deregulation in 1986 that turned the City of London into a global finance hub. The idea is to relax rules originally drawn up for 28 EU nations to make the country’s exchanges, banks, brokers and insurance firms more competitive, allowing them to grab a bigger share of global markets. Mounting evidence that Brexit is doing UK businesses more harm than good has added pressure on the government to make the financial reforms a success.
London’s failure this year to secure a primary listing for its biggest technology firm, chip designer ARM Ltd., was seen by the Conservative government as a wake-up call. It wants to change rules for stock offerings, private trading venues and other areas to give London an edge over rival financial centers. It’s also easing capital requirements for insurers, freeing up tens of billions of pounds that could be invested in national infrastructure. Some of the rules imposed on banks in the aftermath of the 2008 global financial crisis could also be dismantled.
In preparation for Brexit, EU statutes were grafted into British law with the aim of amending them at a later date. That process kicked off in July, when former Prime Minister Boris Johnson’s administration introduced a parliamentary bill laying out a new legal framework for banks, insurers and asset managers. The bill is expected to become law in April or May 2023. Meanwhile, financial firms and their lobbyists are seeking to influence the shape of the reforms.