Kemi Badenoch’s plan for the City could help revive growth if it removes constraints on banks, argues Norbert Sobolak.
Sobolak backs ending bank ring-fencing, revising capital requirements and replacing the Financial Ombudsman Service. He says British parties have shied away from a positive agenda for financial services since the 2008 crisis, despite the sector’s role in funding businesses and home purchases. It contributes roughly one pound in every eight of tax revenue, he says.
His case against ring-fencing focuses on the deposit threshold at which the rules apply. Sobolak argues that it encourages challenger banks to limit their growth rather than incur higher costs. The Skeoch Review estimates the regime costs £1.5bn a year, and A&O Shearman has found that at least four banks capped their growth in response.
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