Kemi Badenoch's speech to City financiers is set to ignite a fierce debate over the future of the UK economy. The Conservative figure's assertion that successive governments have failed to harness the City's unique risk-taking culture as a driving force for growth has sent shockwaves through the financial sector. Critics argue that her call for 'bold structural reform' echoes Margaret Thatcher's pioneering 'Big Bang' reforms, which revolutionised London's financial landscape in the 1980s.
Badenoch will reportedly highlight stagnating UK equities, declining company listings and subdued business investment and productivity growth as key areas of concern. She is expected to advocate for an end to what she views as an overly 'risk-averse' culture in Britain's financial sector, calling on policymakers to seize the opportunity presented by the City's unique risk-taking culture to drive economic growth.
The debate over deregulating the City has gained momentum, with various politicians weighing in. Badenoch and her shadow chancellor, Sir Mel Stride, have been engaging closely with the financial industry in recent months. Her stance on transaction taxes remains unchanged, sparking speculation that she might push for the abolition of stamp duty on shares – a move that could offer significant economic benefits compared to other potential tax cuts.
In a bold move, Badenoch intends to link the City's prosperity directly to the nation's defence capabilities, arguing that growth within the Square Mile and other financial institutions could provide the necessary funding for an increase in defence expenditure. This stance follows her recent calls for reduced welfare spending to free up funds for defence, as advocated by Sir Tony Blair.
Badenoch has also urged the government to commit to a £28 billion uplift in defence spending, as requested by military chiefs, and to avoid back-loading these increases, which would defer financial challenges to future administrations. Downing Street is currently considering a more modest increase of £13.5 billion to defence funding ahead of a Defence Investment Plan expected to be published by 7th July, coinciding with a NATO summit in Turkey.