Your Excellencies, my Lords, Ladies, distinguished guests, I am delighted to welcome you all to our annual dinner. A special welcome and thank you to our partner for this evening, A&O Shearman.
We have a very illustrious audience and indeed speakers tonight, who we are all eager to hear from, so I will keep my remarks brief.
As many of you will have noticed, these dinners tend to come around when the world is experiencing some kind of upheaval – a global pandemic, war or technological leap forward.
This year is no exception. And we find ourselves at the beginning of, what feels like at least, a genuinely new era in the geopolitical landscape.
With change comes opportunity, and it is crucial that we find a way to maintain the UK’s historical leading position in financial and related professional services, in itself vital to the health of the economy as a whole.
This is an industry that employs more than 2.4 million people across the UK and contributes 12 percent of the UK’s total economic output.
This is, and has been for decades, an industry in which the UK has excelled, attracting and competing with the best talent in the world and supporting the domestic growth agenda.
It is also an industry that can boost the UK’s position as an independent trading nation in an increasingly multipolar world.
I think there are broadly three ways to enhance the benefits of this heritage, characterised by a willingness to experiment, try new things, and weigh the risk of doing so against the cost – and risk- of not doing so.
First, our global role allows us to foster strong trade and investment ties with high growth economies in Asia, the Middle East, and Africa, where we’ve identified so called regional growth corridors.
This will give us the opportunity to position the UK as a central global hub for capital flows and services along these new silk roads.
Second, our relationship with Europe would benefit from similar boldness. Brexit is a reality, but it needn't define our future relationship with the EU in perpetuity.
We all need friends in an increasingly fractious world. And after years of focusing on where we diverge, it is time to build on what we have in common.
We already have pragmatic partnerships in energy markets, financial services, and goodwill in security cooperation. The City's expertise in green finance, for instance, complements the EU's climate goals. These are opportunities we must take forward.
The US also continues to be an important trading partner, and the many US and global firms with UK bases are a critical part of our industry.
And third, to think about how we can use domestic policy to encourage bold action and investment as we go for growth and boost the UK’s attractiveness.
Much of the focus in the early part of this year was on one part of the market: the name being “Bonds, Treasury Bonds” But let us not forget our equity markets. They play a crucial role in the value chain of startups to unicorn, providing capital and incentives to create jobs, goods and services.
So here, I want to raise again a simple idea, but one I believe could make a real difference: removing the stamp duty on UK share transactions, or, if we are not yet able to be so bold, trying a pilot of, say, temporarily reducing it or making a phased reduction over a number of years.
Now, I know, as you all do, that stamp duty has been part of our financial furniture for quite some time.
But while that half a percent on purchases of UK shares might not sound like much, in today's high-speed, ultra-competitive markets, it's like running a 100m sprint with 10 kilo weights in your pockets.
Think back to the Swedish experiment of the 1980s. They introduced a series of transaction taxes, including on equities, and before you could say "regulatory arbitrage," much of their trading had packed its bags and moved to, well, right here in London.
A temporary suspension, for example, would give us a chance to test the waters, to see whether a reduction might stimulate more liquidity in UK markets and thus make the UK more attractive for prospective IPOs relative to other centres. It is possible it might encourage more retail investors to dip their toes in too.
Yes, we could see a short-term dip in direct tax revenue, but consider the potential upsides: more trading, more listings, more activity across the board, leading to more tax revenue in other areas such as capital gains. In fact, some independent research suggests that the increased activity might, over time, generate tax revenues that more than offset the immediate losses from reducing the duty.
We've always prided ourselves on being ahead of the curve in London. This could be our moment to prove it again.
Now, this year I’ll be coming to the end of my time as Board chair of TheCityUK. It’s been an incredible experience, and I’d like to thank Miles and the whole team for their commitment and support.
If there’s one idea that I would want to leave with the people in this room, it would be to continue to move forward with confidence and a willingness to experiment.
We live in a competitive world and to stand still is to go backwards. Look overseas to the changes underway in the US and the EU, both of which show how other markets are also focused on growth. The UK simply can’t afford to be left behind.
The UK’s model works, and we need to show people it works, to create optimism, openness, and opportunity.
When we move fast, we must tolerate the risk that some things won’t succeed. But we move too slowly, and we risk inhibiting growth.
The achievements of the past few years - our post-pandemic recovery, our fintech growth, our progress in green finance - prove what we're capable of when we act decisively.
And here I’d like to acknowledge the recent responses from regulators, showing a willingness to begin balancing different aspects of their mandate, including by looking at risk through the prism of growth, moving faster on authorisations and considering how to streamline reporting burdens.
But the next chapter of our economic story will be written by those willing to make bold choices.
It will demand faster decision-making and greater tolerance for experimentation. It will require us to think differently about risk and consider the opportunity cost of playing it too safe.
As Andrew Marvell said, “The Grave’s a fine and private place – but none, I think, do there embrace.”
In short, we’ve had a good dose of Doctor No over the last few years - the next phase could do with a touch more Doctor Yes.
Thank you for your time and I wish everyone an enjoyable evening.
It is now my great pleasure to hand over to our next speaker, the recently appointed Economic Secretary to the Treasury, Emma Reynolds MP. Emma, we’re delighted to have you join us this evening, and are very much looking forward to working with you and your team to deliver what is a very busy and important agenda in the weeks and months ahead.
