Nadhim Zahawi has promised to repeal hundreds of EU finance laws in UK codes, part of the government’s push to deregulate the City of London in a post-Brexit “big bang”.
The Chancellor said at the annual Mansion House Bankers’ Dinner that he wanted to replace the Brussels rules with a “more agile approach” to financial regulation.
Mr Zahawi confirmed the Financial Services Bill will be tabled in Parliament on Wednesday – claiming it would unleash “growth” in the banking sector.
It aims in part to allow for a reform of the Solvency II regime, which governs the insurance market across Europe, to give insurers more flexibility to invest in infrastructure.
The bill would give UK financial regulators a new objective of “encouraging” growth in the sector, rather than just acting as a watchdog.
The Treasury also said the bill would consider new powers for ministers to “collect” Bank of England regulatory decisions that the government doesn’t like.
Mr Zahawi’s predecessor Rishi Sunak, a favorite to win the Tory leadership contest, had promised a post-Brexit “Big Bang 2.0” – a nod to the city’s regulation in the mid-1980s.
But the recently appointed Chancellor’s plans are said to put the government on a collision course with the Bank of England, where there are concerns regulation will increase risk.
Governor Andrew Bailey suggested earlier this month that he would oppose any changes that would allow ministers to meddle. “Regulatory independence is important because a lot of our international reputation depends on it,” he told MEPs.
Mr Zahawi told the audience on Tuesday night that the government was “delivering the benefits of Brexit” when it came to the financial sector.
He added: “The measures I have announced tonight will spur growth across our financial services sector and allow us to mobilize tens of billions of pounds of investment into the UK economy.”
Meanwhile, MPs will attend the third reading debate of Boris Johnson’s highly controversial Northern Ireland Protocol bill on Wednesday.
It comes as an MP warned Britain is on course for a full-blown trade war with the EU if Mr Johnson’s successor insists on tearing up parts of the Brexit Withdrawal Agreement.
Sean Kelly, MEP for South Ireland, warned of “serious consequences” if the next prime minister were to drop protocol reviews without Brussels approval.
“If the UK pushes it forward, and move on [with the legislation]then eventually there will be a trade war,” he told the BBC.