As political and economic turmoil continues to affect UK financial services, the new prime minister (PM) Rishi Sunak has promised to “fix” the “mistakes” of his predecessor Liz Truss and lead the party with “integrity and professionalism”.
Sunak won the Tory leadership in the absence of proposed mandated changes to regulatory measures; however, sources anticipate that he will implement what he set out during his previous leadership campaign or time as chancellor, including the Financial Services and Markets Bill and crypto advancements.
EU law
During the Tory leadership race, Rishi Sunak’s 10-point plan outlined his intention to scrap any EU laws that hindered the UK economy before the next election in 2025.
The Financial Services and Markets Bill, which was supported by the then chancellor, will replace commissioned EU law with UK-specific legislation. It will also focus on cryptocurrency regulation and digital assets.
The current UK financial framework is expected to persist, based largely on the fundamental EU regulations of MiFID and AIFMD that the UK was heavily involved with in conception and implementation.
“Targeted adjustments of reporting requirements are most likely in order to provide the UK with something of a competitive edge versus European jurisdictions – especially when teamed with potential tax considerations,” said Andrew Poole, director of UK regulatory advisory at ACA Group. “Wholesale repeal of any and all European regulations under Sunak, despite campaign declarations, would be a surprise.”
The new PM is also expected to continue to pursue Brexit opportunities.
“Rishi Sunak is set to stay a Brexiteer through and through and is also expected to continue to take a hard line on immigration, despite the struggles of businesses grappling with intense labour shortages,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. “However, there may well be more progress with an Indian free trade agreement, which was put on ice, following a row over student visas.”
It is likely ‘pro-crypto’ Rishi Sunak will encourage cryptocurrency advancement in the UK.
As former chancellor, he announced the government’s plans for stablecoins to be regulated to pave the way for their introduction as a legitimate form of payment.
He said: “We want to see the businesses of tomorrow – and the jobs they create - here in the UK, and by regulating effectively we can give them the confidence they need to think and invest long-term.”
Market optimistic
Both UK and European markets have remained optimistic, closing higher on Monday after the announcement.
Last month, the pound crashed to a record low against the dollar after former PM Liz Truss’s mini-budget.
“Nobody knows what to expect, the market has reacted to a number of changes,” said a London-based corporate lawyer. “Hopefully Rishi can provide stability and proper governance which is one of the greatest concerns and has been clearly overlooked. It is expected that a more experienced chancellor with market contacts can provide reassurance over huge volatility with gilts as an uncertain environment means that businesses cannot plan and so will become even more reactive.”
