Chancellor Rachel Reeves announced the most significant overhaul of UK financial regulations in over a decade, pledging to slash red tape for banks and finance firms to stimulate “informed risk-taking” and revive Britain’s stagnant economy, according to AP News.
Speaking in Leeds ahead of her pivotal Mansion House address, Reeves framed the reforms as essential to her growth agenda, positioning financial services “at the heart of the government’s growth mission… with a ripple effect that will drive investment in all sectors of our economy.”
The reforms target post-2008 crisis rules, including adjustments to “ring-fencing” requirements separating retail and investment banking, alongside a comprehensive review of bank capital reserves. Reeves emphasised these changes would free firms to pursue growth opportunities while maintaining stability.
We are fundamentally reforming the regulatory system, freeing up firms to take risks and to drive growth.
Simultaneously, the Treasury highlighted the “instant impact” of new Bank of England mortgage guidelines permitting lenders to exceed previous income multiples of 4.5 times borrower earnings, a move aimed at revitalising the housing market.
The deregulation push follows a turbulent period for Labour’s economic agenda. Since its July 2024 landslide victory, the government reversed two major fiscal decisions: abandoning planned winter heating subsidy cuts for retirees after public backlash and scrapping welfare reductions following revolt from Labour MPs.
These U-turns have cost the Treasury billions in anticipated savings, increasing pressure for autumn tax rises, despite Labour’s manifesto pledges ruling out increases to income tax or VAT. Economic challenges deepened with recent data confirming two consecutive months of economic contraction, complicating Reeves’ growth targets.
The Chancellor faced personal scrutiny earlier this month when visibly distressed during Prime Minister’s questions session, prompting market volatility as UK borrowing costs spiked. The Treasury attributed the incident to a “personal matter,” with Prime Minister Keir Starmer swiftly offering public support to stabilise confidence.
