City Corporation Policy Chairman: By focusing on innovation we can find a path to prosperity
The Policy Chairman at the City of London Corporation, Chris Hayward, will today [26 April] say the UK’s leading regulatory regime and high standards is a key selling point that draws investment into the UK. A number of high-profile listings going to the USA shows, however, that reforms in the UK are needed to support innovative businesses to stay, scale-up and list in the UK.
Speaking to an audience of more than 1,000 top-level senior decision-makers from UK and overseas financial institutions at City Week, he will also say working in partnership with business, regulation can help technology grow.
This is the 13th annual edition of City Week, organised in partnership with City of London Corporation, The CityUK and UK Finance. The event is being held in-person at Guildhall, over three days between 24-26 April 2023. Find out more here.
An extract from the Policy Chairman’s speech is found below. Please check against delivery.
“A cornerstone of UK’s success in recent years has been the focus on digitalisation and innovation. These twin pillars have helped build the City of London become one of the world’s most advanced, most open, and most sought-after markets. But that competitive advantage is under threat like never before.
“Research by SCM Direct suggested that ‘Britain’s top 100 companies would be worth towards £500 billion more if they moved their stock market listings to New York.’ It is crucial that we direct more capital into the tech sector so that they list here, rather than elsewhere.
“The UK has a dynamic venture capital sector, but it is clear that we need to do a better job of incentivising capital into our innovative start-ups.
“Here in the City, we do not shirk this challenge, but accept that we need to do better, be more attractive, more innovative, if we are to excel in the future.
“That’s why the Lord Mayor Nicholas Lyons and I called for collective action in the form of Future Growth Fund. Targeting up to £50 billion of private sector defined contribution pension schemes, we could inject transformational capital into industries such as fintech, biotech, life sciences, and green technology.
“The rapid pace of change means that too many people in Britain today have analogue skills in the digital age. While 88% of UK businesses admit facing a shortage of digital skills. This is a challenge that we must overcome.
“Here at the City Corporation, we are convening major financial institutions such as Lloyd’s, Schroders, JP Morgan amongst others, for a major programme of work: Finance For Growth, to tackle these challenges and more. The initiative will focus on four fundamental areas, of which tech and innovation sits at the heart of the programme, alongside sustainable finance, competitive marketplace, and international trade.
“The future of our economy is digital, so it is right that regulators are turning their attention to this issue, it is important though that this does not stifle innovation. Working in partnership, regulation can help technology grow.
“But to paraphrase Goldilocks, regulation must be ‘not too hot and not too cold, but just right’. Conversations by the FCA on review corporate governance structures and replacing the current rules with a single listing category with one set of requirements, at our Global Investment Summit last month, are positive to see.
“I have no doubt that by focusing on innovation we can find a path to prosperity once again. So let me outline briefly, three frontline areas where we can show leadership.
“The first is AI. At a time when everyone, everywhere, is looking to stimulate economic growth, PWC has predicted that UK GDP will be 10.3 percent higher in 2030 because of AI. That’s the equivalent of an additional 232 billion pounds – greater than the annual cost of the NHS in England – making it one of the biggest economic opportunities in a generation.
“The second issue is digital cross border payments. New technologies, including digital cross border payments, are revolutionising financial services. UK pilots are currently taking place, and both the Bank of England and the regulators are interested in digital currencies, blockchain, and Central Bank Digital Currency’s. As we explore this new frontier, it will be vital that we follow a path that allows innovative technologies to thrive and protects consumers through agile and proportionate regulation.
“The third issue is cyber security. Last year, UK cyber revenues hit over 10 billion pounds. This growing industry supports almost 2,000 businesses, employing nearly 60,000 people. As the world becomes more geopolitically unstable, cyber security will only grow.
“So, it is vital that we in the UK ride this wave of success, not just so that our critical national infrastructure can endure any storms that come, but so that our economy can prosper.”