Watch Live: PMQs and Chancellor Jeremy Hunt delivers budget
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Jeremy Hunt is set to press ahead with wide-sweeping banking reforms, despite the sector currently on the brink of a crisis. The Chancellor plans to slash red tape in the capital as part of an attempt to make the City of London a financial leader again. This comes despite fears that loosening regulation will introduce yet more risk to a fragile financial system.
The Edinburgh Reforms have been dubbed “Big Bang 2.0” in an attempt to draw parallels with Margaret Thatcher’s overhaul of the Square Mile.
A Treasury source told the Telegraph the plans will be brought forward unchanged, despite the rescues of Credit Suisse and the UK arm of Silicon Valley Bank (SVB).
Speaking yesterday, the Chancellor said that some deregulation could boost UK financial stability.
Mr Hunt told the House of Lords Economic Affairs Committee: “Sticking with the status quo is not necessarily the best thing to do to ensure financial stability.”
He added: “I made it very clear when we announced the Edinburgh Reforms that we would not unlearn the lessons from the financial crisis.
“I think you will see when we publish our recommendations as to which reforms we want to proceed with that we recognise the importance of the protections that have been put in place and we don’t want to undermine them.”
A Treasury source said that the crisis in the banking industry will not affect the Chancellor’s approach to the Edinburgh Reforms.
They said: “There has been no change whatsoever because none of them have anything to do with Britain’s regulatory system.”
Earlier this month, Silicon Valley Bank in the US collapsed, sending stocks falling in other small and medium-sized banks.
In a report last Thursday, Goldman Sachs increased its probability of the US economy entering a recession in the next 12 months by 10 percentage points to 35 percent due to stress on small banks.
But on the same day, Treasury Secretary Janet Yellen told the Senate Finance Committee that the US banking system remains sound.
She said Americans can feel confident that their deposits will be there when needed.
In remarks at a budget hearing, Ms Yellen said the Government had taken “decisive and forceful” actions to secure public confidence in the banking system.
And in a statement Sunday, President Joe Biden said: “The American people and American businesses can have confidence that their bank deposits will be there when they need them.”
In the UK, ripples from Silicon Valley Bank’s collapse shook some funds and investors.
Tom Britton, co-founder of venture capital fund SyndicateRoom, told the Daily Express earlier this week: “While our own portfolio is minimally exposed to SVB, the ripples will be felt across the UK tech ecosystem.
“The irony is that focus and good communication are drilled into startups from early on, but the bank built around startups seems to have failed on both accounts.”
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