Experts tell Reeves not to let City off the leash

Fifty economists and policy experts have issued a stark warning to Rachel Reeves that encouraging the City to expand could threaten financial stability and jeopardise growth.

- Heather Stewart

The chancellor has called the UK's financial services sector "the crown jewel in our economy" and claimed that regulations imposed after the global financial crisis have "gone too far".

Reeves has tweaked the remit of the City regulator the Financial Conduct Authority (FCA) and has urged it to support the growth and competitiveness of the sector, alongside protecting consumers.

But responding to a call for evidence by the Treasury, 50 experts said deregulating the City would work against Labour's wider aims.

They claimed that allowing the financial services sector to expand further risked "undermining the government's efforts to grow the economy" and posed "particular risks to the government's wider industrial strategy and missions".

Signatories included the Nobel laureate Joseph Stiglitz, the Labour peer and anti-poverty campaigner Ruth Lister, the economist Sir John Kay and the former FFCA board member Mick McAteer.

They claimed the City sucked talent and resources away from potentially more productive activities, and that the "vast majority" of lending went towards driving up the price of existing assets, such as property, instead of backing businesses.