Nadhim Zahawi has pledged to repeal hundreds of pieces of EU financial law on the UK statute books, part of the government’s push to deregulate the City of London in a post-Brexit “Big Bang”.
The chancellor told the annual bankers’ dinner at Mansion House that he wants to replace Brussels’ rules with a more “nimble approach” to financial regulation.
Mr Zahawi confirmed the financial services bill would be introduced to parliament on Wednesday – claiming it would “unleash growth” in the banking sector.
It is partly intended to enable reform of the Solvency II regime, which governs the insurance market across Europe, to give insurers more flexibility to invest in infrastructure.
The bill would give the UK’s financial regulators a new aim to “foster growth” in the sector, rather than simply acting as a watchdog.
The Treasury also said the bill would consider new powers for ministers to “call out” regulatory decisions made by the Bank of England that the government doesn’t like.
Mr Zahawi’s predecessor Rishi Sunak, favorite to win the Tory leadership race, promised a post-Brexit “Big Bang 2.0” – a reference to City regulation in the mid-1980s.
But the plans outlined by the newly appointed chancellor are set to put the government on a collision course with the Bank of England, where there are fears regulation will increase risk.
Governor Andrew Bailey suggested earlier this month that he would oppose any changes that would allow ministers to intervene. “The independence of regulators is important because a large part of our international standing depends on it,” he told MPs.
Mr Zahawi told the audience on Tuesday night that the government was “delivering the benefits of Brexit” when it came to the financial sector.
He added: “The measures I have announced tonight will unlock growth in our financial services sector and allow us to unlock tens of billions of pounds of investment in the UK economy.”
Meanwhile, MPs will debate third reading of Boris Johnson’s highly controversial Northern Ireland Protocol bill on Wednesday.
It comes as one MEP warned that the UK is on course for a full-scale trade war with the EU if Mr Johnson’s successor insists on tearing up parts of the Brexit deal.
Southern Ireland MEP Sean Kelly warned of “serious consequences” if the next prime minister abandons protocol checks without Brussels’ consent.
“If the UK insists on it, go ahead [with the legislation]then the end event will be a trade war,” he told the BBC.
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