UK minister reassures Washington on restored stability, fiscal plans
Andrew Griffith, Britain’s economic secretary to the Treasury, told Reuters in an interview that Prime Minister Rishi Sunak’s economic plan was giving financial markets confidence that Britain could withstand an economic environment hard to come by.
“We are back to stability, we are open for business. There is clear political leadership,” Griffith said. “The Prime Minister has set his objectives for 2023, to halve inflation, to return the economy to growth and to reduce debt in the medium term.”
The sales job is a challenging one as Britain finds itself in recession this year, fighting high inflation and the cost of living crisis while it has not succeeded its European peers.
Some investors have begun to rethink their support for Britain’s economy after months of political turmoil, lingering Brexit uncertainties and a recession that the Bank of England has said could last into 2024. Details of many of Sunak’s plans to revive Britain’s economy have yet to be announced.
But Griffith said the turmoil brought about by former Prime Minister Liz Truss’s tax and spending plans was a one-off mistake, and sound fiscal and growth plans were now taking shape.
“This was a moment in time,” he said. “People understand the strength of UK institutions,” he said.
In Washington, Griffith met with US Deputy Treasury Secretary Wally Adeyemo, Securities and Exchange Commission chairman Gary Gensler, and officials at other regulatory institutions, including the Federal Reserve and the Commodity Futures Trading Commission.
Griffith said he was also discussing Sunak’s plans to revive UK growth by encouraging more investment in several key sectors, including life sciences, technology, financial services and fintech.
Under his mandate, this includes the reforms proposed by the Sunak government to strengthen the City of London’s status as a global financial centre, which has been under pressure since Brexit led to new competition from Amsterdam, Paris and Frankfurt.
The so-called “Edinburgh Reforms”, call for a review of the rules established after the financial crisis of 2008-2009, and the reduction of capital requirements for smaller lenders.
The reforms aim to make financial markets work more efficiently through faster business solutions and more appropriate regulation and coordinated development of fintech and crypto currency markets with other financial capitals, he said. .
Asked about the potential for layoffs in the City of London as major banks such as Goldman Sachs and Citigroup prepare to cut thousands of jobs, Griffith said London will thrive as a banking center amid economic headwinds.
“I understand how we look at a different rate environment, as people look at the global macro, they will make decisions, rightly so, about the right size of their organizations for the amount of business that expect to do,” he said. “But London remains competitive.”
(Reporting by David Lawder; Editing by Lincoln Feast.)
By David Lawder