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Jeremy Hunt defends UK financial services shake-up

Jeremy Hunt has defended his overhaul of UK financial services rules, which relaxes some of the measures introduced after the financial crisis of 2008.

The UK chancellor, speaking at the Financial Times’s Global Boardroom event, rejected suggestions that the government was abandoning the lessons learnt following the financial crisis more than a decade ago.

“We have to make sure we don’t unlearn the lessons of 2008,” he told the FT’s political editor George Parker, but added that it was also important to recognise that banks were stronger.

Hunt was speaking on the day that he unveiled his package, dubbed “Edinburgh reforms”, of more than 30 measures that include changes to rules covering bonuses, senior managers and bank ringfencing.

The guiding purpose of the plans is to make the UK one of the most competitive places in the world, Hunt added.

“It would be wrong to say this is of the same scale as what Nigel Lawson did in 1986 but I think it is pretty significant and it shows that the UK is being nimble in constantly changing global markets,” he said.

He also reiterated the UK’s government’s long term plan for economic growth, citing proposals for investment in education and energy. Hunt said the Treasury in the coming months would outline more growth strategies, arguing that “plentiful supply of cheap green energy” would be one means to boost the economy.

“What I want to get across in the months ahead is that we are going to do the things that will help the economy in the short term,” he said. “But also we will be tackling the long term things that have held back British productivity.”

Challenged on the role of immigration, Hunt said he believed that there was a “role for controlled migration in a modern economy” but said the British public also needed to be convinced that there was a strategy to ensure that “people at home will get the skills they need to earn a decent wage”.

The chancellor also warned that the government should be wary of giving in to calls for public sector pay rises that risked locking in high inflation for the long term.

If the government “made the wrong choices now”, inflation would shift from a one-off problem to a “permanent problem”. However, he also recognised the importance of public sector workers particularly during the Covid-19 pandemic.

“This is a group of people to whom we owe a great deal and we know the thing that is making them most angry is the erosion of their pay through inflation,” he said. “We just have to be really careful not to agree to pay demands that have the opposite of the intended effect because they lock in high inflation.”

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