Chancellor promises post-Brexit ‘big bang’ for City

Nadhim Zahawi has promised to repeal hundreds of pieces of EU finance law on UK statute books, part of government push to deregulate the City of London in a post-Brexit “Big Bang”.

The chancellor told the annual Mansion House bankers’ dinner that he wanted to replace Brussels rules with a more “agile approach” to financial regulation.

Mr Zahawi confirmed that the financial services bill will be introduced in parliament on Wednesday – claiming it would “unleash growth” in the banking sector.

It is partly aimed at allowing reform of Solvency II regime which governments the insurance market across Europe, aimed at give insurers more flexibility to invest in infrastructure.

The bill would give UK financial regulators a new objective to “promote growth” in the sector, rather than acting simply as a watchdog.

The Treasury also said the bill would consider new powers for ministers to “call in” regulatory decisions made by the Bank of England that the government does not like.

Mr Zahawi’s predecessor Rishi Sunak, a favourite to win the Tory leadership contest, had promised a post-Brexit “Big Bang 2.0” – a reference to the regulation of the City during the mid-1980s.

But the plans set out by the recently-appointed chancellor are set to put the government on a collision course with the Bank of England, where there are concerns that regulation will increase risk.

Governor Andrew Bailey suggested earlier this month that he would oppose any changes that would allow ministers to meddle. “The independence of the regulators is important because much of our international standing depends on this,” he told MPs.

Mr Zahawi told the audience on Tuesday evening 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 unleash growth across our financial services sector and will allow us to unlock tens of billions of pounds of investment into the UK economy.”

Meanwhile, MPs will take part in the third reading debate of Boris Johnson’s highly-controversial Northern Ireland Protocol Bill on Wednesday.

It comes as one MEP warned the UK was on course for a full-blown trade war with the EU if Mr Johnson’s successor insists on ripping up parts of the Brexit withdrawal deal.

Ireland South MEP Sean Kelly warned of “serious consequences” if the next prime minister ditched protocol checks without consent from Brussels.

“If the United Kingdom push it, and go ahead [with the legislation], then the ultimate occurrence is going to be a trade war,” he told the BBC.