The speech made by Andrew Griffith, the Economic Secretary to the Treasury, to The City UK’s Annual Dinner on 2 February 2023.
Good evening, everyone, and thank you for the invitation to speak to you. And thank you Miles for your kind introduction.
Your contribution to the sector, to the economy, to people’s lives is well known.
Along with related professional services, you contribute over 10% of the country’s GDP, 2.2 million jobs. The largest capital market in Europe and the second largest in the world. And that’s before we think about nearly
£76 billion in total taxes which is enough to fund the entire police force and school system.
The UK is fortunate to have such a strong sector. We know that you have a choice of where to locate and will never take you for granted.
You are part of our history.
London was one of the first ever stock exchanges to be founded.
This year marks 250 years since a group of stockbrokers
moved to Sweeting’s Alley to set up a formal club.
Before then, for close to a century, they’d be working out of the City’s coffee houses because they were deemed too uncouth and rude to be allowed into the Royal Exchange, the City’s centre of commerce.
Of course, I’m sure nobody at all would have that view today!
But in all seriousness, from those humble coffee house roots – shared by insurers at Lloyds Coffee Shop – the entire financial services sector has become a data and markets giant.
From early trading in precious metals, to the telegraph revolution, ticker tape and real time prices. And in between all of the innovation, supporting war efforts, funnelling money into infrastructure and tackling the issues of the day.
We are at our best when we are contributing to solutions to national and global challenges.
It was almost a year ago today that we received intelligence about tanks amassing on the Russian border with Ukraine.
As Putin’s barbaric invasion got under way, you came together to help deliver the biggest economic sanctions in history.
With the help of the UK insurance sector – really the world’s insurance sector – we followed this by implementing a price cap on Russian oil, further undermining Russia’s ability to profit from aggression.
And finally, when people’s livelihoods were at risk from a global pandemic, you stepped in to help us support businesses and families with your payments capabilities. So for everything that everyone in this room has done and your individual leadership – thank you.
As we emerge from a difficult few years for our country, we need to turn our attention to the long-term.
We have five clear priorities.
Halve inflation. Grow the economy. Reduce debt. Cut waiting lists. And stop the boats.
Three of these priorities are about the economy. That’s because the prosperity that it’s our job to deliver can only come on the back of economic stability and growth.
Yes there are economic headwinds, but we have the highest employment rate for half a century, inflation is lower than 14 other EU countries, and the private sector has grown by 7.5% in the last year.
And last week a survey of business leaders by PWC said the UK was the third-most attractive country for CEOs expanding their businesses.
As the Chancellor said last Friday, our vision for the UK is an enterprise culture built on low taxes, reward for risk, access to capital and smarter regulation.
With volatile markets and high inflation, sound money must come first but our ambition is to have nothing less than the most competitive tax regime of any major country.
Delivering stability means making sensible choices on spending to tame inflation: not exposing the most vulnerable, but also not believing we can simply spend our way to prosperity.
As a former CFO myself, I know the importance of balancing the books and I recall graphicly what it was like trying to issue capital in the uncertain markets post 2008.
But we are well placed. All of the natural advantages which have brought us here remain. Our language, culture, great cities and the rule of law.
Our universities are ranked second globally for their quality and include three of the world’s top ten. In order to support the ground-breaking work they do, the government has protected our £20 bn research budget, now at the highest level in history.
Your government has a mandate and a majority and only this week Parliament was passing important financial services legislation.
The Prime Minister has set out five domains of outsize growth and potential where Britain is up with the very best in the world.
Advanced manufacturing, the clean energy revolution, life sciences and digital technology. And of course, financial services.
As your champion I make the case that we count twice. For without efficient and effective capital markets we cannot hope to exploit the potential of the others.
We are fortunate to be one of the world’s top two financial hubs and the world’s largest net exporter of financial services. Your capability to deploy capital behind innovation combined with our research strengths, makes our aspiration to be a technology superpower ambitious but highly achievable.
One would think it was self-evident that growth is good.
As Robert Colvile, Director of the Centre for Policy
Studies, argues in his report “The Morality of Growth” that to some, growth has become the enemy.
Obviously, I disagree. This entire Government does.
That’s important because the private sector, we must never forget, is what drives growth and lets us invest in public services.
And, as Colvile writes, “firms are most effective at doing good when they do well – when they are profitable and successful and attractive employers”.
Let me speak personally for a moment. As we chart our course in a globally competitive marketplace, we have to be clear eyed about what it is that we want to be good at.
My view is simple: if we can’t be globally effective in financial services, we should all go home now.
It is my job to help you achieve that. To remove friction, to support and celebrate risk takers and to shape regulatory frameworks that are well regarded but agile.
As I’ve said before, this sector has had more reviews than Netflix. Many of the authors and contributors are here tonight. We know what we want to do. Now is the moment to get on and deliver.
We are taking this forward in a number of ways: through the Financial Services and Markets Bill, and through the Edinburgh Reforms.
Unleashing the sector, realising potential, delivering for you and for UK plc.
My ambition is for us to be the global financial hub – using our strengths to enhance strong relationships with jurisdictions all around the world, attracting investment and increasing opportunities for cross-border trade.
I want to work hand-in-glove with you this year on the priorities I have agreed with the Chancellor.
First, is to deliver the Financial Services and Markets Bill.
To get that on the statute book by Easter so we can unlock the reforms it contains.
Second, as I’ve alluded to, is boosting competitiveness by delivering the Edinburgh Reforms.
Third, and related, is to unleash private capital to invest in all those growth sectors I mentioned earlier.
And fourth, I want us to bolster financial inclusion and support retail savers and investors.
Good regulation has the power to be a positive tool to enable you all to compete in a global world.
I am grateful to TCUK for your work on how the regulators’ authorisation processes can be made more efficient.
This is an important area, and one that I have raised with the leadership of the FCA and the PRA.
I am pleased that they have committed to make improvements and I am grateful for their collaboration.
In order to strike a better overall balance, the Financial Services and Markets Bill will introduce a new secondary objective in law for the PRA and the FCA on growth and international competitiveness.
That’s important, and taken with a number of other measures, we do expect to see a real change.
And I want to put to bed any idea that this is about a race to the bottom: the government’s vision is about making UK regulation more proportionate and simpler whilst retaining high regulatory standards.
Nor do we seek to diverge for divergence’s sake. In running international businesses, no one wants to add extra complexity or difference. The ambition of a European MoU remains.
Whether it’s implementing the outcomes of Lord Hill’s Listing Review or making regulation more tailored for the UK market, we’re ensuring we remain one of the best countries in the world to do business.
As the Chancellor laid out just days ago, if we’re going to have successful Enterprises – growing companies need capital.
That is why we have selectively used the regulatory flexibility we now have.
One of the most tangible examples – one that will unlock over £100 billion of pounds for productive investment, creating jobs and prosperity – is reforming Solvency II.
It is a change that will unleash capital into productive investments, such as offshore wind.
It will allow the insurance sector to play an ever-greater role in providing opportunity to left behind communities and our transition to Net Zero, with the industry expecting to invest more than £100 billion over the next decade.
Good for business: good for the country.
And then there’s an issue close to my heart: financial inclusion.
What does that mean?
It means making sure all people, regardless of their background or income, have access to the useful products and services which help them succeed in life.
And let me be clear: this isn’t woolly talk.
We’re driving tangible measures.
Take access to cash. You don’t need telling that one of the macro trends we’re likely to see continue this year is a move from cash to electronic payments.
Yet cash is something that millions cannot currently live without.
Those in rural communities, the elderly, those who use cash to manage personal finances.
That is why, for the first time since the ancient Kelts began minting coins in the British Isles, this year will see communities’ benefit from new laws to protect access to cash.
It is also a personal mission to foster an environment that supports individual savers and investors.
This is a government that will always be on the side of those saving for the future or their retirement.
It’s these steps – and more – that show we mean it when we say financial services need to deliver for everyone.
Finally, one of the reasons this sector is so successful is innovation. We want to do everything we can to ensure that UK financial services are at the forefront of technological advancements.
Just look at fintech – what an incredible UK success story.
Despite a challenging economic backdrop, the sector attracted $12.5 bn of investment last year.
That’s second only to the US globally. It’s more than the next 13 European countries put together.
We are committed to turbocharging the growth of the UK fintech sector with the new Centre for Finance, Innovation, and Technology – CFIT.
Indeed, today we’ve heard the exciting news that Ezechi Britton has been appointed as the CEO of CFIT.
He brings extensive experience as a fintech entrepreneur and in venture capital investment.
Building on our FinTech lead, we are going to go further, establishing a framework for regulating cryptoassets and stablecoins.
Just yesterday we published a consultation setting out comprehensive proposals for regulating the sector. It’s a big potential opportunity – I want to get it right so am actively seeking your views.
The golden thread here is innovation. Being at the forefront of change, is how we will make the UK the natural home of innovative financial services companies.
Rather than looking enviously at our competitors, I want them to look to emulate us.
Ladies and Gentlemen, Miles, I am excited.
Excited to be in this job, and excited to be able to push ahead with a significant programme of work for the balance of this year.
The opportunity we have is substantial and the moment to seize it is right now.
Together we can continue to build the UK as one of the world’s most competitive locations for financial services.
A financial services superpower that will help secure the long-term economic wellbeing of the country.
Thank you again for your welcome, thank you for listening and thank you for everything you continue to do for this industry and this country.
