The latest essay marking the 20th anniversary of the 1986 reforms argues that another sudden, Big Bang‑style deregulation is a fantasy; what the City truly needs are hard incentives for investors. This shifts the conversation from dramatic regulatory fireworks to the steady, policy‑driven environment that can sustain capital flows over the long term.
Why hard incentives matter more than deregulation
The original Big Bang succeeded because it removed entrenched barriers at a moment when global finance was expanding rapidly. Replicating that moment now would require a comparable external shock, which simply does not exist. Instead, firms are looking for certainty: predictable tax treatment, clear capital‑raising rules and a stable regulatory framework that rewards long‑term commitment. Without those, even generous deregulation can feel like a hollow promise.
Hard incentives—such as targeted tax relief for investment in UK‑based funds, a clear roadmap for green‑finance incentives, and a streamlined approval process for new market infrastructure—provide the tangible benefits that investors can count on when allocating capital. They also signal that the government is prepared to back up its rhetoric with measurable support.
Who will feel the impact first
Asset managers, private‑equity houses and fintech firms are the most immediate beneficiaries. For them, the cost of operating in London versus other European hubs hinges on the net fiscal position and the ease of moving capital across borders. A well‑designed incentive package could tilt the balance back in favour of the City, especially as competition from Frankfurt, Paris and Dublin intensifies.
Mid‑size firms that have struggled with the post‑Brexit regulatory landscape will also see relief. By reducing compliance overheads tied to capital‑raising and reporting, hard incentives free up resources for growth rather than bureaucracy. That, in turn, creates a ripple effect through the supply chain—legal services, technology providers and real‑estate landlords all stand to benefit from a reinvigorated investment pipeline.
What senior executives should watch
Decision‑makers need to monitor three developing fronts. First, any Treasury consultation on tax incentives for financial services will outline the scope and timeline of relief measures. Second, the FCA’s upcoming review of market‑access rules could introduce simplifications that make London more attractive for new listings. Third, the government’s green‑finance strategy is likely to embed sustainability‑linked incentives, aligning capital with policy goals.
While the details are still being drafted, executives can begin by mapping their current cost structures against potential incentive scenarios. Scenario planning will highlight which product lines would become viable under reduced tax burdens or faster approval processes. It also prepares firms to engage constructively with policymakers during consultation periods.
Finally, senior leaders should consider building internal capabilities to track policy changes in real time. A dedicated regulatory‑affairs function that liaises with industry bodies can ensure the firm is first to adapt when hard incentives are announced.
Risks of relying on rhetoric alone
Without concrete incentives, the City risks a perception problem that could become self‑fulfilling. Investors may interpret vague promises of deregulation as a sign that the UK is still uncertain about its long‑term stance on finance. That could accelerate the migration of funds to jurisdictions with clearer, incentive‑rich environments.
Moreover, over‑reliance on deregulation without accompanying incentives can expose firms to regulatory volatility. A sudden roll‑back of a deregulated rule—should political winds shift—could leave firms scrambling to comply, eroding confidence built over years.
In short, the City must move from the fantasy of a new Big Bang to a pragmatic suite of hard incentives that deliver measurable benefits. Only then will investors feel confident enough to commit capital for the long haul.