This was too little, too late from the ‘iron' Chancellor

Telegraph

15-07-2025

There will be a round of deregulation. Lending rules will be relaxed. And new listings will be accelerated. Rachel Reeves did everything she could in her Mansion House speech this evening to win back the City. From any other Chancellor it might have been greeted with loud applause. From this one, however, it will be dead on arrival. The relationship with finance is irretrievably broken – and is too late to win it back now.
The bankers and brokers listening to Reeves this evening will like much of what she had to say. The relaxation of lending rules will be welcomed, even if it is questionable whether the British housing market needs yet more debt instead of more supply. Easing some red tape is always helpful, and something needs to be done to encourage more new listings.
In reality, however, Labour's relationship with business is now broken beyond repair. When Reeves took office there was plenty of goodwill. Business was ready for a change of 14 years of a Conservative government that seemed more and more chaotic with every year that passed. She even had one or two ideas that sounded good, even if they were thin on detail.
By now, however, the City feels completely betrayed. The assault on non-doms has driven wealthy clients out of the country, and many successful entrepreneurs as well, with nothing to replace them. The steep rise in employers' National Insurance has drained money out of companies, and hit profits and dividends. Her changes to inheritance tax have hammered not just farmers but every privately owned business, and many of those are still crucial to the economy. The extra employment rights might please the unions but they could be ruinous for the City. The list goes on and on. Business was told that Reeves was a pro-growth, pro-enterprise Chancellor. Instead she has led an assault on the private sector with no parallel in recent British history.
It looks as if it will only get worse over the next year. We all know that there will be another huge round of tax rises in the autumn, and business may well bear the brunt of that. It could be higher business rates, a windfall tax on the banks or utilities, or even a 'temporary' surcharge on corporation tax, similar to the levy imposed in France earlier this year. Likewise, the plutocrats of the Square Mile are likely to be squeezed for extra tax revenue. We may well see a return of the 50 per cent top rate of tax. Or, even worse, a wealth tax, catastrophic for the City where £10 million is regarded as a respectable annual bonus, and not an obscene fortune to be taxed away.
Sure, a few reforms are worth having. And it is good that Reeves recognises how crucial the City and financial services are to the British economy, even if many of the Left-wingers on her backbenchers won't agree with her. Finance has always been one of the key drivers of growth, as well as generating huge tax revenues. But the blunt truth is this. Reeves has lost the trust of the City. And no matter how hard she tries, it's surely gone forever.