The Chancellor’s Mansion House speech this week was met with a blend of euphoria and unease, a mood befitting the City’s post-Brexit, post-pandemic ambiguity. Rachel Reeves, Britain’s first female Chancellor, delivered a confident address promising to unshackle the financial services sector and spur growth through deregulation.
Her rhetoric aimed to dispel doubts about Labour’s economic credentials. But for all the applause from the Square Mile, some are asking whether this was bold reform or political theatre dressed in pinstripes.
“Champagne corks will be popping in the City,” said Riz Malik, a wealth manager, reflecting the mood among financial firms who have long lobbied for looser rules.
Reeves’ reforms include lowering the affordability stress rate on mortgages, speeding up FCA and PRA approvals, and revisiting the ring-fencing rules designed to insulate retail banks from investment risk. In a nod to capital markets, she also floated plans to channel pension savings into high-growth venture funds, an idea long courted by fund managers but fraught with risk.
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This deregulatory zeal marks the most assertive financial liberalisation push in over a decade, according to Emma Jones of *Whenthebanksaysno.co.uk. But she, like others, struck a cautious note: “It could unlock real momentum… but success depends on delivery. Regulators must adopt a genuinely pro-growth mindset. Without that, the promise risks becoming just another headline.”
Too little, too late?
Indeed, that is the central tension in Reeves’ agenda. The Chancellor’s tone — more ‘conquest’ than caution, as one economist quipped — sought to reclaim Labour’s image as fiscally responsible yet forward-looking. But critics argue the substance lags the sentiment. “This should’ve been delivered 12 months ago,” wrote Gabriel McKeown, a Substack commentator. “Now it feels like too little, too late after a year of fiscal instability and confidence erosion.”
The reforms aim to make the UK more attractive to international listings and home-grown capital, addressing concerns about London’s fading financial preeminence. Samuel Mather-Holgate, a financial adviser, said British banks may benefit from relaxed capital adequacy rules, spurring mortgage lending and investor optimism. But he, too, noted a lack of detail, particularly on the Chancellor’s pledge to revive UK-based venture funding and attract corporate listings to the London Stock Exchange.
What about the UK housing sector?
On the housing front, Reeves’ proposals, such as reducing the stress test to just 1% above the base rate, could expand borrowing capacity. “A more optimistic outlook,” said Harps Garcha of Brooklyns Financial. But the policy is not without risk. Garcha warned of history repeating itself if regulatory slackening echoes the pre-2008 era: “We need to avoid a repeat of the financial crisis.”
This sentiment was echoed by others. “The mortgage market needed these changes in 2020, not 2025,” said Sean Horton of Respect Mortgages. “Nice words about affordability, but where’s the housing supply?” His critique highlights a gaping omission in Reeves’ remarks: while access to finance is easing, the underlying housing shortage remains unaddressed.
Andrew Montlake of Coreco described the Chancellor’s approach as a “challenge to financial institutions” to grow without courting disaster. He praised the increased flexibility for lenders to issue higher-income multiple loans and welcomed competitive boosts from more challenger banks entering the market. But again, concerns over the relaxation of ring-fencing suggest that not all reforms are uniformly welcomed.
“Lack of confidence”
Elsewhere, political cynicism coloured reactions. Scott Gallacher, an adviser at Rowley Turton, questioned the credibility of Labour’s promise to build “on strong and stable foundations.” He noted that in 14 years of opposition, Labour had failed to develop a coherent strategy on housing and planning, two policy areas crucial to Reeves’ vision of sustainable growth.
The notion that deregulation alone can spark a new era of prosperity is also being questioned. “It is not regulators holding back investment,” McKeown observed, “but a lack of confidence in the broader political and economic landscape.” Financial liberalisation, in this context, can look more like a sleight of hand than a strategic reset.
Still, this was a political win for Reeves. Her delivery was polished, the message business-friendly, and the symbolism powerful. But the question remains: will these reforms deliver more than just short-term cheer in the City? With global capital still skittish, housing prices untamed, and productivity sluggish, the Chancellor’s vision may need to stretch beyond deregulation to win long-term credibility.
As ever in British politics, the devil is not in the delivery—it is in the detail.
