13 December 2024

AFME: UK Call for Evidence Financial Services: Growth and Competitiveness Strategy

This paper outlines our high-level response to the call for evidence on the Government’s Financial Services Growth and Competitiveness Strategy, focusing on key areas such as sustainable finance, the adoption of emerging technologies, capital market funding, securitisation, investment research, and the cost of market data.

We believe that high-quality regulation, international competitiveness, and economic growth are essential for the prosperity of the UK's financial markets.

We welcome the fact that financial services is one of the eight growth-driving sectors that the Government has identified and will be prioritised based on both existing and emerging strengths.
The UK Government should focus on subsectors with high growth potential, which are currently or can contribute to international competitiveness and make significant contributions to economic activity and innovation. This response focuses on securitisation, sustainable finance, and digitalisation, as well as other areas that will help drive growth in the UK economy.
The Government should consider the interdependencies between financial services and other sectors. This involves clear governance structures and arrangements for public-private finance models, along with policy measures, incentives, and investment vehicles that cater to different approaches, pools of capital, and risk tolerances.

Using Capital Markets to build a Competitive and Growing Economy in the UK
The Government's Call for Evidence rightly highlights the UK's strong foundations, including some of the most liquid capital markets in the world, a highly innovative economy, and one of only two truly global, full-service financial centres. We agree with this assessment, but this does not mean that there are not structural problems and barriers that are restricting the sector from reaching its full potential to create growth across the real economy.
Building on the UK's strong foundations, the Government’s focus should be on key issues hindering growth. Specifically, capital market funding, securitisation, investment research, and market data, which are areas where real economic benefits could be realised with the correct reforms and approach. We have outlined recommendations to address these issues and boost the sector's growth and competitiveness....

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