There is “nothing insurmountable” in the UK’s cost-of-living crisis and high levels of inflation, according to Chancellor of the Exchequer Jeremy Hunt, who said the UK’s economy has “shown itself [to be] more resilient than many predicted”.
In his Mansion House speech, delivered yesterday evening (10 July), the Chancellor opened with the government’s plans to tackle inflation
“Following the pandemic and energy shock, like other countries, the UK faces difficult challenges. It has shown itself more resilient than many predicted, but that resilience is itself one of the reasons for higher inflation,” he said.
“But with the levers of fiscal and monetary policy, wholesale food and energy prices falling and a government that has made the battle against inflation its number one priority, there is nothing insurmountable in the current situation.”
Hunt said the government will work alongside the Bank of England to do “what is necessary for as long as necessary” to reduce inflation to the 2% target.
“It means recognising that bringing down inflation puts more money into people’s pockets than any tax cut,” he added.
‘Big plans’
The Chancellor said he and Prime Minister Rishi Sunak want the UK to become “the world’s next Silicon Valley”, which will mean ensuring the financial sector has “the right architecture to provide the best possible security for investors as well as capital for businesses”, and “the best talent right here in the UK to make that happen”.
“The structures put in place after the financial crisis have served us well and financial stability will always be our top priority,” Hunt said. “But we can further improve the functioning of capital markets, so this evening I set out the government’s Mansion House reforms.”
As part of these reforms, the government wants to strengthen the UK’s position as a listings destination, by providing more incentive for companies to launch here.
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The Chancellor has therefore published draft legislation on prospectus reforms, which he said will “create a more effective regime than [the UK’s] EU predecessor, giving companies the flexibility to raise larger sums from investors more quickly”.
Hunt said the government welcomes the Financial Conduct Authority’s commitment to engage with markets on “rule changes on removing the requirement to unbundle research costs by the first half of next year”.
“This will ensure we are better able to fund quality research into the new Silicon Valley sectors,” he added.
With the UK government having already abolished the Share Trading Obligation and Double Volume Cap – in a bid to increase accessibility for UK businesses to access liquid markets across the globe – Hunt announced the upcoming lunch of an “intermittent trading venue”.
“That will improve private companies’ access to capital markets before they publicly list,” he explained. “This will be up and running before the end of 2024, and put the UK at the forefront of capital market innovation.”
Regulation
Hunt recapped on the government’s new Financial Services and Markets Act, which was passed last month. Under this new legislation, he explained the government is repealing “100 pieces of unnecessary retained EU law, further simplifying our rulebook whilst retaining our high regulatory standards”.
“We are working closely with the Bank of England to reflect on lessons from recent events to ensure the UK has the best possible arrangements in place to improve continuity of access to deposits when a bank fails even if it is not a systemically important one,” he said.
For more information on the announced pensions reforms, please visit our sister publication International Adviser’s article here.
