By David Lawder
WASHINGTON (Reuters) – The UK financial services minister reassured his US colleagues on Wednesday that the UK’s debt market instability last fall was a one-off event, returning stable government and continuing to be a solid partner for Washington and Wall Street. worked.
In an interview with Reuters, British Under-Secretary of the Treasury Andrew Griffith said Prime Minister Rishi Sunak’s economic plan gives financial markets confidence that Britain can withstand the challenging economic environment ahead.
“We are back to stability, we are open for business. There is clear political leadership,” said Griffith. “The Prime Minister has set 2023 goals: halve inflation, get the economy back to growth and reduce debt over the medium term.”
Selling is a tough one, as the UK plunges into recession this year and underperforms its European peers while battling high inflation and the cost of living crisis.
Some investors are starting to rethink their support for the UK economy after months of political turmoil, ongoing Brexit uncertainties and a recession that the Bank of England says could last into 2024. Details of many of Sunak’s plans to revive the UK economy have yet to be released.
But Griffith said the turmoil caused by former Prime Minister Liz Truss’ tax and spending plans was a one-time mistake and sound fiscal and growth plans are now taking shape.
“It was a moment in time,” he said. “People understand the power of UK institutions,” he said.
In Washington, Griffith met with U.S. Deputy Secretary of the Treasury Wally Adeyemo, Securities and Exchange Commission chair Gary Gensler, and officials from other regulatory agencies, including the Federal Reserve and Commodity Futures Trading Commission.
Griffith said Sunak also discussed plans to boost its growth in the UK by encouraging more investment in several key sectors, including life sciences, technology, financial services and fintech.
His mandate includes reforms proposed by the Sunak government to strengthen the City of London’s status as a global financial centre, which has been under pressure since Brexit kicked off new competition from Amsterdam, Paris and Frankfurt.
The so-called “Edinburgh Reforms” are calling for a review of rules put in place after the 2008-2009 financial crisis and easing capital requirements for smaller lenders.
He said the reforms are aimed at making financial markets work more efficiently through faster trade settlements and more appropriate regulation, and the coordinated development of fintech and cryptocurrency markets with other financial capitals.
When asked about the potential for layoffs in the City of London as major banks like Goldman Sachs and Citigroup prepare to lay off thousands of jobs, Griffith said London will thrive as a banking hub amid economic headwinds.
“Looking at a different ratio environment, I understand that when people look at the global macro, they will quite rightly make decisions themselves about right-sizing their organization for the amount of work they expect to do,” he said. “But London remains competitive.”
(Reported by David Lawder; Edited by Lincoln Feast.)