CashNews.co
What’s going on here?
The UK economy could see a transformation through a bold embrace of financial risks, with New Financial suggesting this shift might unlock an extra £100 billion in yearly investments and help reverse economic woes.
What does this mean?
New Financial’s call for more risk-taking notes over a decade of cautiousness following the 2007-2009 credit crisis. This caution has seeped into financial regulations and the broader UK economy, stifling investment growth. UK markets have been trailing behind US counterparts, and the think tank believes a bolder approach could combat economic stagnation. Regulatory bodies like the FCA and PRA face challenges like limited resources and stagnant pay, though they’re not solely responsible for the underperformance. The FCA is aware of the need to recalibrate and is enacting changes to enhance innovation and ease regulatory pressures as part of extensive reforms.
Why should I care?
For markets: A push for profit and potential.
As the UK aims to boost its economic performance, increased risk-taking could invigorate stock and bond markets, leading to more robust private capital and pension investments. This shift promises a lively market atmosphere, presenting growth opportunities for investors. As sectors expand, changes in lending practices and investment flows should be closely watched, potentially positioning the UK as a more appealing spot for global investment.
The bigger picture: Reimagining regulatory resilience.
Promoting risk in the UK’s financial framework could drive regulatory innovation, setting a global example in post-Brexit economic restructuring. By cutting regulatory redundancies and enabling regulators to embrace innovation, the UK could transform its financial sector into a growth catalyst, boosting overall economic output. These structural changes could serve as future policy models worldwide, demonstrating how strategic risk-taking can bolster long-term economic prosperity.