Edinburgh
is
the
seat
of
the
Scottish
Parliament
and
the
stronghold
of
the
Scottish
National
Party.
It’s
also
home
to
a
world-famous
arts
festival
and
its
accompanying
comedy
fringe.
But
it’s
also
a
major
insurance
centre
and
the
headquarters
of
NatWest
Group,
which,
under
the
supervision
of
the
old
Royal
Bank
of
Scotland
(RBS),
was
bailed
out
in
the
financial
crisis
under
the
last
Labour
government.
That
doesn’t
make
it
a
natural
location
for
a
Conservative
chancellor
to
launch
a
reboot
of
London’s
Square
Mile,
some
409
miles
to
the
south
as
the
heart
of
the
English
economy.
But
the
Edinburgh
Reforms,
themselves
a
reboot
of
2021’s
Mansion
House
announcements,
beckon
a
promised
land
of
more
innovative
and
vibrant
corporate
performance
and,
with that, better
returns
for
pension
funds
and
retail
investors
alike.
This
is
a
tough
balancing
act.
It’s
about
having regulatory
architecture
that
is
both
tough
enough
and
loose
enough,
or,
as
one
investment
trust
manager
puts
it
to
us
today,
not
“throwing
the
baby
out
with
the
bath
water.”
Without
wishing
to
dwell
on
the
financial
crisis,
RBS’s
demise
was
not
a
glorious
example
of
either.
In
today’s
environment
of
corporate
governance,
almost
all
British
companies
are
run
better
than
RBS
was
in
its
imperial
phase.
UK
Regulation
–
Fighting
the
Last
War?
The
regulatory
landscape
of
2024
is
to
a
large
extent
a
legacy
of
that
cataclysm,
and
represents
a
recognition
that
the
Treasury’s
pre-crash
“light
touch”
approach
to
the
City
was
naive
at
best
and
disastrous
at
worst.
But
have
regulators –
in
an
effort
to
prevent
another
RBS-style
implosion –
gone
too
far?
And
is
the
current
regime
now
appropriate,
or
is
it
a
case
of
fighting
the
last
war
rather
than
the
current
one?
Politicians
don’t
like
to
say
this
out
loud,
but
there
is
an
assumption
that
“loosening”
regulation
might
be
one
way
to
kick
the
current
malaise
of
unproductivity,
sluggish
growth
(if
any)
and
paranoia
about
risk.
Conservatives
the
world
over
are
generally
keener
on
more
markets
than
regulation,
of
course,
but
the
UK
does
have
a
reputation
for
high
standards
of
corporate
governance,
which
is
one
attraction
for
some
foreign
investors.
Even
seasoned
fund
managers
point
this
out.
Dismantling
the
regime
could
be
dangerous.
LSE
Takes
on
NYSE
The
current
mood
is
downbeat.
Companies
are
choosing
to
list
in
the
US
rather
than
the
UK
(see
the
case
of
ARM),
changing
their
primary
listing
to
New
York,
or
not
listing
at
all.
There
was
only
a
handful
of
IPOs
in
2023
in
London,
and
none
shot
the
lights
out.
Despite
the
markets
going
“risk-on”
last
year,
the
FTSE
100
barely
moved.
It’s
often
said
the
UK
has
the
“wrong
sort”
of
companies.
Finance
and
energy
stocks
still
dominate
the
FTSE
100
more
than
40
years
after
its
inception.
Of
course,
all
Europeans
would
like
stocks
like
the
Magnificent
Seven
(Apple
[APPL],
Microsoft
[MSFT],
Alphabet
[GOOGL],
Amazon
[AMZN],
Nvidia
[NVIDIA],
Meta
Platforms
[META],
and
Tesla
[TSLA])
in
their
home
market.
But
everyone
wants
an
economy
as
dynamic
as
America’s.
What
does
the
UK
government
say?
Naturally
its
language
is
cautious
but
the
choice
and
order
of
words
is
telling.
The
UK’s
success
as
a
financial
services
hub
is
built
on
“agility,
consistently
high
regulatory
standards,
and
openness”.
And
the
sector
needs
to
benefit
from
“dynamic,
proportionate
regulation”
(my
emphasis
added).
How
much
regulation
is
proportionate?
And
is
there
a
correlation
between
how
well
UK
companies
are
run
and
the
attractiveness
of
the
UK
as
a
place
to
invest?
That’s
probably
hard
to
prove.
For
more
on
that,
follow
Morningstar.co.uk
this
week
for
an
article
on
how
UK
companies
stack
up
on
governance
risk.
Change
of
Government
Looms
But
all
this
may
be
irrelevant
anyway.
There
is
an
election
this
year,
and
commentators
are
talking
about
a
14-year-old
Conservative-led
government
feeling
tired.
There
is
also
every
sense
Labour
is
expected
to
have
its
own
approach
to
financial
regulation.
The
shadow
chancellor
Rachel
Reeves
has
made
no
secret
of
her
desire
to
work with
business
rather
than
against
it.
Last
time
the
party
was
in
power
it
had
to
face
a
once-in-a-lifetime
event
of
a
global
financial
crisis,
so
it
will
be
hoping
for
plainer
sailing
this
time
around.
Perhaps
that
also
means
it
will
be
risk-averse
in
a
way
certain
Conservatives
just
aren’t.
Just
like
his
friends
in
Edinburgh,
the
current
chancellor
may
well
find
himself
watching
from
afar
some
time
soon.
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