Chancellor offers banking regulations carrot to City

Rachel Reeves told the City last night that restrictions imposed after the 2008 banking crash “went too far”, as she tried to regain the trust of the finance sector by promising to ease banking regulations.

- DAVID MADDOX

In a speech at Mansion House, the chancellor fought to win back the business community following intense criticism of last month’s Budget. It followed the announcement of her plans to create a series of pension “megafunds”, which the former Bank of England economist hopes will unlock around £80bn of new investment into UK businesses and infrastructure.

By rowing back on regulation, Ms Reeves is pinning her hopes on being able to fire up the economic growth which Labour put at the heart of its manifesto plan for government. It will be the first easing of the rules since the then Labour chancellor Alistair Darling was forced to nationalise two banks and impose a raft of restrictions in the wake of the 2008 financial crash.

Ms Reeves’s controversial Budget, with £70bn of spending increases and a record £40bn of tax rises, has prompted numerous challenges over whether she was serious about economic growth.

Her speech came as:

• Businesses made clear that they are losing confidence in the chancellor

• Farmers prepared to descend on London in their thousands over changes to inheritance tax

• A revolt over the employers’ national insurance contributions increase raised doubt over economic growth

• Charities, dentists, hospices and GPs called for the same exceptions on national insurance as the public sector

• One trade union pushed for the public sector to work a four-day week