By Andy Silvester
To paraphrase the former US President Gerald Ford, we are approaching the end of our national nightmare.
The Tory leadership election finally comes to an end this time next week, when the new Prime Minister will travel to Buckingham Palace to inherit an in-tray of what would no doubt be described by Whitehall mandarins as “challenges.” The energy cost spike will inevitably be first on the list – but there are others lurking in that Prime Ministerial red box.
Should it be Liz Truss, as expected, her Chancellor is likely to be Kwasi Kwarteng. He will be faced with another pressing problem: giving the City the freedom it needs to remain at the very top table of global finance.
The chairman of the London Stock Exchange certainly feels concerned enough to warn of the capital’s equity markets becoming only a ‘regional’ player – but said post-Brexit reforms could give the City a welcome boost.
There are certainly threats all about the place – both external from foreign competition and more systematically from the propensity of investors to underprice (at least in relation to other countries) British equities. It doesn’t help that a series of highly-touted IPOs, as a result of both market weakness and individual company circumstances, have not exactly been without their hitches in the last couple of years.
Some commentators have suggested that a successful Truss administration will need to focus in on four or five core issues, and solve them in time for the next election. T
hey may well be right, but her colleagues around the Cabinet table must start the hard work of preparing the UK economy for medium- and longer-term prosperity, meaning finding some meaningful post-Brexit reforms. That means working with existing regulators – not merging them, as some have suggested Truss is keen to do – to create a reliable post-Brexit framework for financial services. Just because it is technical does not mean it can be kicked into the long grass. The UK needs a world-class financial services hub – and the City’s historical role is no guarantee of what the future may hold.
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