Your Excellencies, my Lords, distinguished guests, Ladies and Gentlemen, I am delighted to welcome you all to our annual dinner.
It’s wonderful to see everyone here tonight, and my thanks go to Miles and the team for organising such a great event.
You should know that they put every single course through a rigorous process of taste testing, complete with detailed impact assessments, so I hope it is all to your liking. And if not, then you know who to blame. We do like to be accountable to our stakeholders.
An annual dinner is a good time to take stock. We’re coming together at a pivotal moment for the UK, and its position in the world. We have, with war, a pandemic, inflation and turbulent markets, seen some of the worst of times. In the spirit of the Oscar-nominated film: it felt like everything, everywhere, was happening all at once.
But, as the dust starts to settle, there will be opportunities to set the UK up for the best of times. To make the most of them, we need a coherent, clear and joined up approach, that takes a positive longer-term view.
The chance to act will be brief. I think we are all in agreement that stronger productivity, growth and innovation are priorities for the UK. How to get them is a different matter.
They are the outcomes of an ecosystem, one that has all the elements of finance, business and policymaking working together. All we can do is set that ecosystem up in such a way that all the different parts are aligned towards an agreed set of goals, making those outcomes more likely.
We’re blessed with a head start. We’ve got a world leading centre for financial and professional services. We’ve got a bustling and creative business sector. And we’ve got a policymaking and regulatory system that has historically been so good, it’s been replicated in many countries around the world. Ensuring all of these parts remain best-in-class will be key to the UK’s long-term competitiveness.
But, currently, the whole is lagging our peers in some important areas. Particularly when it comes to productivity, which is at the heart of it all. As Paul Krugman once said: “Productivity isn’t everything, but, in the long run, it is almost everything.” And, in the long run, this will be apparent as population growth slows in many countries. In such cases, it can be useful to look at our peers, especially those with big financial centres, and see what they’re doing right. Time and time again, we see that the common theme is to do with alignment.
When we study what is happening in places like Singapore, Luxembourg or Switzerland, we see systematic efforts to join up the approaches of government, regulation and industry, with positive knock-on effects. It creates a coherence in aims across the different bodies. Coherence leads to clarity; every part of the ecosystem understands how they contribute towards those desired outcomes. Clarity, in turn, leads to confidence. And when the world has confidence in what you’re doing, you’re more competitive and more attractive to outside capital.
Against this backdrop, it is crucial that the UK remains the team to beat at the top of the league tables. Our financial and related professional services sectors are a great engine for the UK economy, providing 2.2 million jobs right across the country and generating a trade surplus of £81bn billion in 2021, the most in the world. That engine also transforms savings into productive capital, connecting people to companies and projects. We can, and want to, direct more of that capital towards advancing productivity and encouraging innovation.
And so, any progress we make in lining up the aims of policy, regulation and investment will ease that flow of capital, strengthen our ecosystem, and hone our competitiveness.
Here, I’m not talking about groupthink. Diversity of opinion, respectfully made, is an essential quality of our system. It’s the best way to build an accurate picture of the world and account for the needs of different stakeholders. Through that system, we can agree on where we want capital to flow to, and from.
But once that destination is set, and the rubber hits the road, then all the wheels must be pointing in the same direction. I think this need for increased alignment is applicable to both the national and international systems.
What emerges from some of the discussions we have with regulators and policymakers at a global level is the risk of a disconnect between shared aspirations, such as finding the risk capital that will accelerate decarbonisation on the one hand, and the fear of the hidden systemic risk on the other.
This is a gap that needs to be bridged. We can’t expect the rewards of capital investment without also accepting some of the risk. And, with existential issues in play, the risk of not doing something may well be the biggest risk of all. Getting that balance right, to link up the priorities of the future with the actions of the present, will be a priority.
To conclude, there’s no doubt that 2023 will have more surprises in store for all of us. And while we don’t have to change everything, everywhere, all at once, a small modification of mindset is needed. One that makes sure the aims of the whole are reflected in the workings of the parts. This I believe, would help to produce great outcomes.
At TheCityUK, we look forward to working with all of you to realise these shared ambitions. And we are grateful for your active participation and thoughtful engagement.
Thank you for your time and I wish everyone an enjoyable evening.