Financial Services Growth and Competitiveness Strategy: Positive Money response

In a press release which claimed to have "cut financial red tape", the Chancellor stated: "Today, I have placed financial services at the heart of the government’s growth mission. "

Sara Hall, Co-Executive Director at Positive Money, said:

“It remains unclear how growing the financial sector will deliver the government's goals of building a clean energy superpower or revitalising British industry - and even less clear how City deregulation will raise living standards for working people.

“The experience of recent years, as well as a wealth of academic evidence, shows that expecting growth to ‘trickle down’ from the financial sector simply does not work.

“Rather than being an end in itself, the financial sector should be harnessed to support the government’s missions, with stronger measures to align investment towards low-cost clean energy and a wider industrial strategy that delivers for all regions of the UK, which are currently lacking in the government’s plan.”

The government also announced that it would not be proceeding with a UK Green Taxonomy - which would distinguish between which investments are considered "green" and "dirty". This is something Labour had pledged to push ahead with before it was elected.

Sara Hall, Co-Executive Director at Positive Money, said:

“Watching the government row back on a pre-election commitment to push forward with the long-delayed green taxonomy is deeply disappointing.

“With UK financial firms actively increasing their financing of fossil fuels at a time when the government is seeking to rapidly transition to green energy to bring down bills and mitigate climate change, it is clear that a distinction between clean and dirty investments is needed.

“Eyes will now be on whether the government stays the course on its other commitment to introduce mandatory Paris Agreement-aligned transition plans for financial firms, which it is currently consulting on.” 

Notes:

• The government's full press release can be found here: https://www.gov.uk/government/news/leeds-reforms-to-rewire-financial-system-boost-investment-and-create-skilled-jobs-across-uk 

• 50 experts wrote to the government in December 2024, citing evidence that growing the financial sector harms the wider economy: https://positivemoney.org/uk/press-release/growing-finance-sector-may-harm-government-missions-experts-warn/ 

• In Labour’s pre-election Plan for Financial Services, they pledged to “Advance the plans for the UK Green Taxonomy, ensuring it is science-based and interoperable with international standards, and user-friendly for business. The current government has delayed the taxonomy for over a year. A Labour government will define a clear timeline for completion of the taxonomy, and voluntary and mandatory reporting for all businesses in scope.”: https://labour.org.uk/wp-content/uploads/2024/01/Financing-Growth.pdf

• The latest Banking on Climate Chaos report - published by a coalition of civil society organisations - found that the world’s biggest banks actually increased financing of fossil fuel companies for the first time since 2021: https://www.bankingonclimatechaos.org/?bank=JPMorgan%20Chase#fulldata-panel