A hallmark of the financial services calendar, Mansion House speeches are not just a big day for the City, but one for the wider UK economy.

Often these speeches attract little attention, but with a blockbuster Autumn Budget backdrop that “wiped the slate clean” and set out Labour’s ambitious economic agenda, this was a landmark moment for the new Chancellor. 

And, perhaps unsurprisingly, Reeves used her maiden speech to focus on growth, which is the underlying principle for a set of reforms that bring significant changes to the sector. 

Pensions, pensions, and more pensions 

Arguably, the shake-up of the pensions sector was the main headline of the night. 

Sourcing large amounts of capital for major projects has long been pinned as one of the key restrictions on the UK’s international competitiveness, and successive Chancellors have been honing in on the sector for a while. 

With news today that the UK economy grew a measly 0.1% last quarter, it couldn’t be more essential that UK pensions, which are expected to oversee £1.3 trillion in assets by 2030, are put to work.

Last night Reeves announced she plans to reform the public pension system by creating “megafunds”. The UK’s web of piecemeal local council pension pots will consolidate into 8 pools of cash. She expects to unlock an additional £80 billion in investment, helping to support capital-heavy infrastructure projects. 

The ambition is high. However, critics demanding even more radical change may be disappointed. It was floated that the Chancellor might look at the ‘one fund to rule them all’ Canadian-style system or change regulations to mandate domestic investment. Time will tell if she should have gone further. 

Reforming the regulators 

As FTAdviser helpfully pointed out, the word reform appeared 19 times in the speech last night. Reform was key to Reeves’ announcements and reforming the role of financial regulators is a bedrock of her agenda. 

Reeves placed the groups under harsh scrutiny and claimed financial regulation has gone “too far” in recent years. Not something you usually hear from a Labour leader. 

The Chancellor said the government had issued new growth-focused remit letters to the main industry regulators, including the Financial Conduct Authority, the Prudential Regulation Committee, the Monetary Policy Committee, the Financial Policy Committee, and the Payment Systems Regulator, demanding that the organisations steer their focus away from “regulating for risk” and instead focus on regulating for growth. 

The Financial Ombudsman Service will also be called upon to modernise. The Service, which plays a vital role for consumers seeking redress, will still maintain its current mandate, but a new agreement will be made between the FCA and the Ombudsman to help “create a surer climate for investment”. Their joint Call for Input opens today. 

International ambitions 

The Mansion House speech took a very different tone to the looming wave of protectionism heading straight at us from across the pond. Speaking to the room, and undoubtedly with the knowledge the wider UK public would be listening in, Reeves repeated the government’s stance that there would be no return to the EU. 

She did, however, echo Starmer’s line that there must be a “reset” of relations with Europe. Citing the “interconnected” nature of the market, Reeves emphasised the need for open collaboration between the UK and Europe, but also highlighted that she views relationships with India, China and other fast-growing economies as “important economic opportunities for the UK”. 

The Chancellor’s perspective was backed by Andrew Bailey in calling for closer ties with our biggest source of trading. While emphasising that as an official, he takes no position on Brexit, he does feel a need to “point out consequences” and that his “old-fashioned free trader” mindset encourages him to seek openness on trade. 

The announcements described in this piece are very much the tip of the iceberg. In the coming weeks, businesses from sectors across the financial services ecosystem will be poring over the proposed reforms to see how they might be affected. 

To pick out a few, a consultation for a UK Green Taxonomy, six new integrity principles for the carbon markets, a 40-page National Payments Vision, a consultation on captive insurance, and we have also seen the next steps in reforming the UK wholesale markets framework. The government website has a helpful collection detailing all the announcements.

A final word 

Will this be enough to unleash a wave of growth across the economy? Time will tell. But what is clear is that Labour’s focus on growth isn’t going anywhere, and easing regulations and unlocking pension capital is a key part of the plan. The Financial Service Growth and Competitiveness Strategy (due to be published next year) and the Spring Budget will likely be the next indicators of the UK’s future economic strategy. 

Until then, we wait.