The Chancellor should prioritise pension reform, enhanced use of digital verification and attracting FDI to kick start growth in the Spring Statement, says Chris Hayward
The Chancellor has vowed to kick-start the economy, and the upcoming Spring Statement will be key to making that happen. The source of growth is right here in the City, where the UK’s financial services sector remains a global leader.
Recent moves, like integrating the Payments Systems Regulator into the Financial Conduct Authority (FCA), are steps in the right direction. This streamlines processes, offering businesses a single point of contact, while also expanding the FCA’s secondary objective to drive growth and competitiveness. But more reforms are necessary. We need a system that fosters risk-taking, attracts investment, and positions the UK as a leader on the global stage.
Let’s use this momentum to address the critical issue of the UK’s regulatory environment. We need a system that balances rigorous standards with flexibility. The City Corporation has put forward specific recommendations to reduce the financial burden on businesses, including proposals to abolish stamp duty on UK shares and phase out the bank levy and surcharge on firms.
The UK has long been a leading destination for international investment, but the challenge now is to reverse the alarming decline in equity capital listings, especially as we face an increasing gap in Foreign Direct Investment (FDI). London is still the third-largest market for raising equity, but that doesn’t guarantee future success. We must make the UK more attractive for new listings and mobilise international capital into strategic sectors.
Inward investment
An investment hub will be crucial to these goals, by streamlining efforts across the UK to attract inward investment, we can capture a greater share of international funds and put the UK on a path toward sustained economic growth. I’ll be continuing to convene industry to see what this will look like.
Pension reform is also key. The government’s focus on mobilising UK pension assets for investment in UK industries is a positive step. The commitment in the Mansion House Compact of at least five per cent of default funds to unlisted equities by 2030 in the best interest of savers while supporting economic growth. While progress against the ambition of the Compact continues, we are working with the Pension and Lifetime Savings Association (PLSA) and the Association of British Insurers (ABI) to go further and faster.
Digital verification solutions could add up to £4.8bn to the UK economy over the next five years, transforming digital services and mitigating fraud losses
Beyond pensions, we believe there is a significant opportunity to reform the UK’s ISA system to encourage a shift from cash into stocks and shares investment when in savers’ best interests. The government and FCA’s Advice Guidance Boundary Review presents a crucial opportunity to enhance access to information for savers.
Finally, innovation is the lifeblood of any economy. Our Vision for Economic Growth report estimates that the adoption of digital verification solutions could add up to £4.8bn to the UK economy over the next five years, transforming digital services and mitigating fraud losses. We must continue to create an environment where such technologies can thrive and implement reforms.
A forthcoming City Corporation report will offer specific recommendations to policymakers on how to enhance the use of digital verification. One essential reform would be to broaden the remit of the National Wealth Fund to include projects focused on scaling digital verification. The future of the UK’s digital economy will be shaped by bold decisions made today.
To thrive, the UK must act decisively. We need policies that drive growth, investment and risk-taking. The Spring Statement is a key opportunity for bold reforms that will secure the UK’s economic future.
Chris Hayward is policy chairman of the City of London Corporation