City of London Corporation Advocates for Economic Growth Ahead of Budget

Overview of City of London Corporation’s Proposals

The City of London Corporation has outlined a robust agenda for bolstering the UK economy through strategic investments in financial services. Chris Hayward, the Policy Chairman of the Corporation, is urging the Chancellor to recognize this sector as the vital engine for national growth ahead of the upcoming Budget announcement.

Current Economic Landscape in the Square Mile

Recent data indicates that employment figures in the Square Mile have surged, now standing at 25% above pre-pandemic levels, with a total of 678,000 jobs generated. The Square Mile contributes over £110 billion to the UK’s economic output annually, emphasizing its importance in the financial sector.

Collaborative Efforts to Enhance Financial Services

In a recent partnership with HM Treasury, the City Corporation has established the Office for Investment: Financial Services. This initiative aims to position the UK as the premier destination for investment and business operations globally.

Last week, Chancellor Rachel Reeves unveiled initiatives at the Regional Investment Summit, designed to build on the Mansion House Accord. These plans aim to mobilize billions into projects that boost UK productivity and enhance living standards.

Addressing the Investment Gap

Research has identified a significant £115 billion investment gap within the UK economy. The City Corporation’s proposals are targeted at bridging this gap through creative budgeting strategies that inspire confidence and attract capital.

Chris Hayward’s Vision

Hayward articulated the urgency for change, stating, “The financial services sector is the engine of the UK economy; it must be supercharged.” The City Corporation believes that addressing the investment shortfall through innovative policy measures is crucial for sustaining public services funded by tax revenue.

Key Recommendations for the Autumn Budget

The City Corporation emphasizes several recommendations aimed at fostering economic growth:

1. Tax Policies to Support Industrial Strategy

• VAT Suspension on Financial Services: Advocating for a VAT-free status to enhance the sector’s attractiveness.
• Phasing Out Bank Levy and Surcharge: This measure aims to improve international competitiveness.
• Abolishing Stamp Duty on Shares: Initiating a removal of stamp duty on recent IPOs is proposed to encourage London listings.

2. Maximizing Domestic Capital

• Investible Project Pipeline: Urging government action to create a credible pipeline of projects, particularly in digital, energy, and transport infrastructure.
• Support for the Employer Pension Pledge: This involves focusing on value for money when selecting pension providers, backed by over 20 major employers.
• Value for Money Framework: Encouraging regulators to align their frameworks to prioritize returns for savers.

3. Shifting Retail Investment Culture

• Review of ISA Incentives: Advocating for a review that encourages investments in Stocks and Shares ISAs over Cash ISAs.
• Support for Investment Guidance: Finalizing the Advice Guidance Boundary review to assist investors effectively.
• Encouraging Equity Investments: Exploring policies to motivate savers to consider UK-listed equities as a preferred investment avenue.

4. Raising Investment Levels

The newly established Office for Investment: Financial Services is encouraged to implement an AI-driven digital platform. This initiative aims to connect capital with viable projects, enhancing responsiveness and automating processes.

5. Leading on Sustainable Finance

The City Corporation expresses a strong desire for the UK to spearhead global efforts in sustainable finance. Key recommendations include:

• Aligning Public Finance Institutions: This will help build investable markets and mitigate risks for private capital.
• Championing Transition Finance Guidelines: Supporting initiatives discussed at COP30 to set global standards.

Conclusion

The City of London Corporation is taking proactive measures to strengthen the financial services sector, thereby driving UK economic growth. With recommendations aimed at enhancing investment, reforming tax policies, and prioritizing sustainability, there is a clear path towards addressing the existing £115 billion investment gap. By adopting these strategies, the UK government has an opportunity to secure its position as a global leader in financial services and sustainable finance.