Under Keir Starmer the Labour Party has reset its relationship with corporate Britain and reestablished itself with the financial and professional services sector (FPS) through a sustained charm offensive in the City and beyond.
Led by Shadow Chancellor Rachel Reeves and closely supported by Jonathan Reynolds, Shadow Secretary of State for Business, and Tulip Siddiq, Shadow City Minister, this strategy is paying dividends. Bloomberg reported that the majority of money managers and traders backed a Labour government at the next General Election being the best outcome for the City.
While the Labour party can be pleased with establishing a receptive audience across FPS, which anybody who has recently attended an event with Rachel Reeves can testify, significant challenges remain.
Primary among these challenges is delivering on the first of Labour’s five key missions for Government: ‘Secure the highest sustained growth in the G7 – with good jobs and productivity growth in every part of the country making everyone, not just a few, better off’. With the UK economy suffering from continued weak growth – currently forecast by the OECD to have the second lowest growth across the G20 in 2024 – high inflation and a cost-of-living crisis, the shadow team will be at the forefront of explaining, and then implementing, this incredibly ambitious target, if Labour forms the next government.
So how will Labour jumpstart UK economic growth? Plans are already being set out. Rachel Reeves sees the transition to NetZero as a significant opportunity. The party’s Green Prosperity Plan crystallises this thinking and scale of ambition, whilst also recognising the threat to UK competitiveness of the Inflation Reduction Act and European response. Equally, a robust Industrial Strategy is being developed under Jonathan Reynolds to set out a framework for a stable, long-term planning and investment. The FPS will be a critical partner for Labour in delivering on both these headline economic policies and has welcomed Labour’s commitments to reform planning laws, especially for renewable energy projects.
However, many questions remain on policy detail. For example, how will a Labour government meet its commitment to deliver 100% clean power by 2030? Especially, while delaying its pledge to invest £28bn annually in green investment until the middle of the next Parliament (2026), on the grounds of fiscal responsibility.
Financial and Professional Services
The last few years has seen major policy reform across the FPS sector. The Financial Services and Markets Act has created a UK regulatory framework for financial services, payment services and financial market infrastructure. The current government has set out its future vision for FPS through the Edinburgh Reforms and recently the Mansion House Reforms, with significant impact for the insurance and pensions sectors.
Labour has played an active role in this reform process, but again questions remain over how this policy landscape will evolve under a newly formed Labour government. Will it stick with the current vision for the regulatory framework for FPS in the UK? Will it fully implement the Mansion House reforms, given the shadow team have announced their own headline policy on pension reform? Will it align with the government on delaying some NetZero targets? How will it regulate the Buy Now Pay Later Market? How does it see the development of Open Finance? Will it continue with audit reform? How will it manage the tension between the supervisory role of regulators, with the ‘new’ secondary objective focused on competition. The list goes on!
If this was not enough, Keir Starmer’s recent meeting with President Macron in Paris, and France and German proposals for a tiered EU membership has put Brexit in the media spotlight again. Labour is clear that there is no intention of re-joining the single market in a first-term Labour government, and the FPS sector has largely moved on from Brexit.
However, the review of the EU-UK Trade and Cooperation Agreement in 2026, and Starmer’s commitment to get a “much better” Brexit will ensure that 10 years after the EU referendum vote the UK’s relationship with Europe will remain a live issue for FPS.
WA’s Financial and Professional Services practice has put together a top line summary of the Shadow Cabinet and Ministers who will deliver on Labour’s ambitious plans for FPS and the UK economy. These are the people that your business needs to know and track as they develop the policy detail to achieve the ‘highest sustained growth in the G7’.
If you would like to find out more about WA’s Financial and Professional Services Practice and the services we provide, please contact Tom Frackowiak at Tom.email@example.com.