The chancellor told the annual Mansion House bankers’ dinner that he wanted to replace Brussels rules with a more “agile approach” to financial regulation. Mr Zahawi confirmed the financial services bill would be introduced into parliament on Wednesday – claiming it would “unleash growth” in the banking sector. It aims in part to enable reform of the Solvency II regime governing the insurance market across Europe, with the aim of giving insurers more flexibility to invest in infrastructure. The bill will give the UK’s financial regulators a new aim to “foster growth” in the sector, rather than simply acting as watchdogs. The Treasury also said the bill would consider new powers for ministers to “call in” regulatory decisions made by the Bank of England that the government doesn’t like. Mr Zahawi’s predecessor, Rishi Sunak, favorite to win the Tory leadership contest, had promised a “Big Bang 2.0” after Brexit – a reference to the City’s settlement of the mid-1980s. But the plans drawn up by the newly appointed chancellor are set to put the government on a collision course with the Bank of England, where there are concerns the regulation will increase risk. Governor Andrew Bailey suggested earlier this month that he would oppose any changes that would allow ministers to intervene. “Regulatory independence is important because much of our international standing depends on it,” he told MPs. Mr Zahawi told the audience on Tuesday evening that the government was “delivering the benefits of Brexit” in terms of the financial sector. He added: “The measures I have announced tonight will unlock growth across our financial services sector and allow us to unlock tens of billions of pounds of investment in the UK economy.” Meanwhile, MPs will take part in a third reading debate on Boris Johnson’s highly controversial Northern Ireland Protocol bill on Wednesday. It comes as an MEP warned the UK was on course for a full-blown trade war with the EU if Johnson’s successor insisted on scrapping parts of the Brexit withdrawal agreement. Southern Ireland MEP Sean Kelly warned of “serious consequences” if the next prime minister waived protocol controls without Brussels’ consent. “If the UK pushes it, and go ahead [with the legislation]then the final event will be a trade war,” he told the BBC.
