Miles Celic is the CEO of TheCityUK
Our next Prime Minister will need to boost prosperity at a time of high inflation, a slowing economy, and pressure on the cost of living. Fundamentally, these challenges share a common long-term solution: a focus on economic growth, raising productivity and reducing regional inequality.
This isn’t a new prescription. Successive governments have grappled with it, for a century or more. But it is an area where the private sector, especially one of the UK’s most successful industries, can play a vital enabling role.
The UK financial and related professional services industry is not just a domestic success story, but a global one. It provides jobs for 1 in 14 people right across the country, two-thirds of which are outside London. It contributes over 12 percent of the UK’s economic output and is the UK’s largest taxpayer.
But there is more that can be done to help the industry supercharge the UK’s regeneration.
Much of the debate in the leadership election so far has been about how to fund spending commitments or tax cuts. These are substantial issues. But we must not forget that one of the most powerful options we have is to boost growth, and subsequently tax receipts. This will, in turn, help to drive prosperity and address the cost of living crisis.
This week, TheCityUK will be launching its manifesto, Going for Growth, setting out to both candidates how government should work more closely with the financial and related professional services industry so it can maximise its contribution to economies and communities across the UK.
In our Manifesto, we have identified eight areas in which we seek the support of the next Prime Minister to drive forward this agenda. Doing so will help the UK regain its status as the number one international financial centre. This will mean delivering more skilled jobs, supporting investment in public services and boosting long-term economic growth.
Enhancing UK competitiveness is critical. The forthcoming Financial Services and Markets Bill rightfully restores international competitiveness as a secondary objective for British regulators. This brings us in line with competitors such as Singapore and Australia, countries that have shown that it is possible to protect consumers, while providing a regulatory environment that nurtures innovation and investment.
And boosting investment in the UK is vital to underpin our country’s longer-term prosperity. We risk falling behind the EU on taking advantage of unlocking further financing for UK infrastructure through the reform of the Solvency II insurance regulation. Combined with a greater focus on trade in services – another UK national advantage – we can help boost the UK’s position in this economically critical area, a position increasingly facing strong competition. We can also attract further investment by taking advantage of our independent trade policy to craft Free Trade Agreements that play to the UK’s unique strengths in services trade.
While tax has been frequently discussed during the leadership race, the problems with the system extend beyond the headlines about tax rates. Our tax system needs to be re-aligned to encourage investors to back the UK. Too much of the focus in the national debate is on the rate. This is, of course, important. But so is a streamlined, predictable, and simple tax system which also rewards innovation and entrepreneurialism.
Ensuring access to the world’s best talent is also key. As well as building skills amongst the UK workforce, British businesses need access to the world’s brightest and best people to develop innovative products and services for UK and international customers. Many businesses are struggling to bring overseas employees to the UK for periods of short-term project work and training. This bureaucracy is adding costs and stifling innovation. The next Prime Minister should reform short-term business mobility rules, allowing sponsored employees to enter the UK on a short-term basis visa-free – while still ensuring we keep control of borders through the controls associated with sponsorship.
Getting these things right will ultimately bring benefits across our country. We are proud of the industry’s status as a British success story and believe it should play a central role in the next Prime Minister’s plans to boost investment, level up the UK and drive the long-needed economic growth that is the only way for the UK to meet its potential.