A Bond-worthy blueprint for growth
Speech by Bruce Carnegie-Brown, Leadership Council Chair, TheCityUK at the Annual Dinner 2024 – 8 February 2024
Your Excellencies, Chancellor, my Lords, distinguished guests.
I’m delighted to join with Miles in welcoming you all to the Annual Dinner, and The Raffles Hotel – which many of you will know was the Old War Office and also the inspiration behind one of its employee’s greatest inventions: Ian Fleming’s 007, named after the ‘00’ rooms downstairs...
James Bond is, of course, a great British export that has supported our soft power and reputation around the world for more than six decades.
And while I can’t promise that my remarks will match the levels of excitement he generates, I did want to borrow from his world to underline three themes I believe our sector needs to harness if we are to continue to grow our global leadership position.
These themes are: the right intelligence; the right infrastructure and the right innovation.
All are evident in Bond’s MI6, and all must be present to support a resilient, competitive and growing UK economy in the years ahead.
So taking the first: intelligence.
Every successful intelligence agency is built on the flow of timely and accurate information, allowing us to paint a clearer picture of the potential threats – and the opportunities to act.
The same is true for the UK economy.
Having weathered a quarter-century of seismic events – bookended by 9/11 on one side and a land war in Europe on the other, with a global financial crisis and pandemic in between – it would take a brave person indeed to say we should not expect shocks of a similar scale in the next quarter of this century.
None of these threats were beyond the realm of imagination: demographic changes, geopolitical developments and financial warning signs might all have pointed us to the possibility of these risks crystallising.
And while that is always easier with hindsight, there is no reason we cannot be front footed in anticipating and gathering intelligence on the risks we are likely to face in the future.
As we look to the future, the list of emerging risks certainly reads like a James Bond plotline: self-teaching technology; the warming of our planet through climate change; political instability from Eastern Europe to the Middle East; state and non-state sponsored misinformation and cyber attacks.
In our connected world, any one of these has the potential to derail and destabilise the entire system.
To address these risks, we must take action to build resilience into our systems, using timely and accurate intelligence.
If we do this well: managing these risks becomes an opportunity.
So where do we get the intelligence we need?
The UK is fortunate to host world-leading risk and consultancy sectors which have much to offer here: decades analysing data and providing insight to spot the trends others might not, and creative risk solutions to help businesses and governments manage a range of threats.
This intelligence is already being shared: in forums like Lloyd’s Futureset research platform, bringing practitioners and experts together to understand emerging risks; in the National Cyber Security Centre’s Information Sharing Partnership between businesses and government; and of course in TheCityUK’s ongoing consultation and convening on issues from Big Tech to global trade, allowing our financial and related professional service sectors to align in addressing the risks and opportunities facing the UK economy.
That collaborative information sharing – both in our overseas network and between our sectors here in the UK – is a vital part of staying ahead of a changing threat landscape and of turning risk into opportunity.
And all of this is powered by human intelligence – to make that leadership possible.
The UK has long been a centre for expertise and talent. We have the highest concentration of cyberspecialists in the G20, and three times more AI experts in London than the next biggest hub, Paris.
The combination of human intelligence and information sharing networks will enable us to anticipate risk, build resilience against and provide solutions to the threats that lie ahead.
But intelligence alone is not enough; we also need the right infrastructure to help us thrive.
Where Double-0 7 has to grapple with the machinations and restrictions of Whitehall, our industry also sits in a network of structures and systems that can either support, or hinder, its success.
This is an important part of the UK’s vibrancy: a connected and collaborative financial ecosystem that has enabled growth and global competitiveness for centuries.
But like MI6 in the age of cybercrime; we must ensure the structures fit the setting.
For the UK, that means moving from damage limitation to growth acceleration; from a response to the events of 2008 and 2009 to grasping the risks and opportunities of 2024 and beyond.
The improvements to capital and liquidity introduced in the wake of the 2008 recession were vital to underpin confidence and increase the stability of our financial system. And they remain a core part of our system’s effectiveness.
But, fifteen years later, we must use this platform to adapt our mindsets and models to seize opportunities for growth and prosperity to meet the aspirations and expectations of the wider population.
In the insurance sector, global uncertainty is putting risk management in the spotlight: and leading to double-digit growth in premiums written in London in each of the last two years, much of it coming from overseas.
The banking sector has seen similar growth, with banks benefitting from improved net interest margins, while we’re also seeing growing appetite from investors wanting to deploy their capital in UK markets. At Lloyd’s, for example, our London Bridge risk vehicles have attracted approaching one billion dollars of new capital since launching in 2021, and last month saw the launch of the UK’s first catastrophe bond, supporting the UK’s ambitions to become a leader in insurance-linked securities.
This growth is underpinned by the UK’s leading professional and legal services capabilities. So the story across our sector, and many others, is one of opportunity.
Capturing that opportunity will generate economic growth and our sector should be a key partner for government as they seek to support a thriving economy in the years ahead.
It’s why we have championed and welcomed the Government’s Edinburgh reforms, the Mansion House reforms and the new secondary objective for regulators introduced by the Financial Services & Markets Act. Indeed, the Government’s policy agenda in the last 12 months demonstrates both an understanding of the sector, and an ambition for our sector to expand its global leadership.
We’re very grateful for that support, and pleased to see the same ambition shared by the Labour Party.
However, Government policy cannot be implemented without an equally ambitious growth mindset from our regulators.
It means proportionality between the oversight provided and the size of the business being regulated; it means balancing risk against the benefits of faster growth; it means moving more quickly to respond to the applications for approval to invest capital, appoint new leaders, start new enterprises and create new products.
At Lloyd’s, we have the capacity and expertise to evaluate and approve a new underwriting syndicate within 30 days, but the external regulators require many months more before making a decision, causing businesses to set up outside the UK.
In senior management appointments, a US financial services firm hiring a new Head of its UK operations – perhaps one of the top ten roles in their organisation – can make a decision within weeks... yet regulatory requirements on senior managers could prevent them being approved for at least three months and often longer.
These checks were introduced for good reason, and we would be the worse for not having them. But by streamlining processes – and devolving responsibility where appropriate – we can make sure the UK remains an attractive place to do business, deploy capital and develop talent.
Nine months on from penning the Government’s agenda into law through the Financial Services & Markets Act, there’s still much to do to implement all aspects of the bill.
It’s essential that regulators consult with industry to get that implementation right – while moving at a pace that allows UK business to become the competitive player and collaborative partner we want it to be.
Our customers, capital and talent will not wait for us to get our ducks in a row.
I’m confident we have that talent – many of them in this room as part of TheCityUK’s Next Generation Leadership Council – so it’s clear the UK’s success, present and prospective, remains founded on the strength of our expertise and ideas.
This is about making the economy fit the moment. Moving at pace and adopting a positive mindset: less Dr. No, more double-O.
Setting our economic infrastructure up to enable this growth – something we are all aligned with – will allow us to support both the flow of good intelligence, and generate a wave of fresh innovation.
While for James Bond, innovation may all be about flying cars and exploding pens... for us it is about mobilising our intelligence, infrastructure and capital in the UK to support investment in growth and allow the UK to lead the world in innovation.
We are already in a good position.
In the green space, over half of all sustainability startups are registered here in the UK and 90% of global carbon credits are traded this side of the Atlantic.
In the tech space, the UK hosts 37 of the Top 50 FinTechs and writes nearly a quarter of the world’s cyber insurance. Fleming’s Q branch would be proud.
And from the tech space to outer space, the UK is leading the world in developing global standards for space exploration and satellite retrieval, through the Astra Carta developed by the King’s cross-sector Sustainable Markets Initiative, in collaboration with UK space experts.
And on that note, we wish His Majesty a speedy recovery and send our wishes to all his family.
So there’s lots of opportunities to innovate: and with the backing of businesses, government and regulators – all of us embracing calculated risk-taking and progressive decision-making – there is no reason the UK should not maintain its leadership in these areas.
So that is our 007-inspired blueprint for a competitive and growing UK economy.
Timely intelligence to allows us to understand and anticipate threats and opportunities in a complex and changing world.
Fit-for-purpose infrastructure that enables the investment and growth needed right across the UK.
And cutting-edge innovation to seize the opportunities in front of us, from the tech space to outer space.
This is the future we envisage at TheCityUK, and it’s what events like this are all about: sharing intelligence and ideas to support a thriving UK financial and related professional services sector.
We’re pleased to have you all with us in those efforts – and also for the support of the UK Government in enabling growth and leadership. It’s why we’re delighted to have the Chancellor with us today.
But before we hear from him, we’ll have a brief pause for starters – and perhaps to discuss your favourite Bond movie.
To be checked against delivery.
 Sifted/FT, 2023