Tuesday 14 July 2026 5:26 am  |  Updated:  Monday 13 July 2026 12:51 pm

Kemi Badenoch’s economic revolution could set the City free

By: Norbert Sobolak

Share

Facebook Share on Facebook X Share on Twitter LinkedIn Share on LinkedIn WhatsApp Share on WhatsApp Email Share on Email

Abolishing bank ring-fencing, recalibrating capital requirements, and replacing the Financial Ombudsman Service are essential steps to remove stifling regulations and reignite growth, says Norbert Sobolak

No political party in Britain has set out a positive agenda for the financial services sector since the 2008 crisis. The reticence is understandable; after 2008, defending finance won no votes. Yet the City is one of the country’s most powerful engines of growth: it supplies the capital for businesses to expand and families to buy homes, and contributes roughly one pound in every eight of tax revenue. The costs of that caution have compounded quietly for two decades – even the Bank of England, easing its leverage rules last week, tacitly admits as much. But adjusting one dial does not fix the machine. Kemi Badenoch’s new plan for the City is therefore welcome. Its core reforms – abolishing bank ring-fencing, recalibrating capital requirements and replacing the Financial Ombudsman Service – are the right foundations for her promised “economic revolution”.

Consider ring-fencing first. Because the regime applies only above a deposit threshold, challenger banks have a powerful incentive to cap their growth rather than shoulder its costs, which the government’s independent Skeoch Review puts at £1.5bn a year. A&O Shearman finds at least four banks have done precisely that. This means less competition for savers’ deposits and fewer of the cheaper, more innovative products a more contested market would generate. The annual cost exceeds the £1.3bn the bank........

© City A.M.