Sunak Sees Big Bang 2 for U.K. Financial Services Industry

(Bloomberg) -- Chancellor of the Exchequer Rishi Sunak hinted at a repeat of Margaret Thatcher’s “Big Bang” period of financial services deregulation now the U.K. is no longer bound by European Union rules.

There’s “a whole range of things we can do slightly differently” after Brexit, Sunak said in a podcast interview with the City A.M. newspaper published Monday. People talking about a repeat of the former prime minister’s 1980s deregulatory agenda “make a really, really good point,” he said.

“If you look at the history of the City stretching even further back than that, it has always constantly innovated, adapted and evolved to changing circumstances and thrived and prospered as a result,” Sunak said. The city has a base to work from, “whether you want to call it Big Bang 2.0 or whatever.”

The U.K. left the EU’s single market and customs union on Dec. 31 with a last-minute trade deal that offered little clarity for financial services firms. In particular, there was no decision reached on so-called equivalence, which would allow businesses to sell their services into the single market from London.

Even Prime Minister Boris Johnson said the deal doesn’t go as far as he’d have liked on financial services. The two sides aim to agree a memorandum of understanding on the industry by March.

Brexit Bites

Brexit is already having an effect on financial services, pushing almost all of European share trading -- representing about 4.6 billion euros ($5.6 billion) of trades a day -- away from London.

But Sunak told City A.M. that the trade deal offers “many things” that are “good” for U.K. financial services, including provisions on the free flow of data, business travel, and on legal and professional services.

“I feel very confident, and very excited, about the future of the City of London and financial services in general,” he said.

Sunak also said in the short term he envisages more of the active fiscal policy he’s pursued over the past 10 months, borrowing in order to support businesses and workers.

“I believe that’s the right thing to do given the nature of the shock that we’re experiencing, and it will likely be the right strategy to continue supporting the economy in the short term as we recover from this,” he said. The government will seek to ensure the public finances are “sustainable over time,” he said.

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