As the year progresses there is one topic that is sure to feature in any discussion at the workplace and over the dinner table: the next general election. When will it be? Who will win?
While keeping in mind Harold Wilson’s maxim that “a week is a long time in politics” given the current state of the opinion polls and the mood within the country it is difficult to envisage the United Kingdom entering 2025 not run by a Labour administration. So what might a potential Labour government mean for the London market?
Because of the engagement that the LMG and other market firms and bodies have had with the shadow Treasury team, there is no doubt that it appreciates the significant economic contribution the London market makes to the City (25% of its overall GDP). The industry has also made clear the role the London market can play in helping a Labour government achieve some of its key policy objectives around climate change and financial inclusion.
Other indicators of the mood in Labour HQ can be found in their policy paper Financing Growth. At this stage of the election cycle, this paper is understandably a little light on detail in places. However, it does present a reassuring picture for the London market and the things we believe it needs to thrive.
What particularly struck me as refreshing was that the Labour team acknowledges that the UK’s world leadership in financial services is not a given, and requires a continually evolving approach to regulation and governance.
Labour’s focus on the competitiveness of the City and financial services more widely is acutely relevant to the London market. Over two-thirds of our premiums are written outside the UK, ensuring the London market is one of the UK’s primary export success stories.
Labour has proved that it understands where the threats to London are coming from through its support of the competitiveness objectives in the Financial Services and Markets Act 2023, and acceptance of the need to improve the efficiency of regulatory and supervisory activities. This gives confidence that reinforcing the UK’s competitive position will be a priority within the corridors of a potential Labour Whitehall. A key part of future discussions will be to encourage the new government to hold regulators to account to bring about real change in regulation and competitiveness through robust action.
The London market also aligns with Labour policy objectives in the party’s desire to reinvigorate UK capital markets and to lead the world in innovative risk transfer. As an industry reliant on foreign capital, this emphasis will form a key plank of the LMG’s engagement with a future government on issues such as Insurance Linked Securities (ILS), establishing a world-leading captives regime, and the regulation of innovative products.
There is no doubt that insurance and the London market also has an important role in facilitating the full lifecycle of green projects and in the global transition away from fossil fuels, which are an important part of Labour’s ambitious sustainability objectives.
Any incoming Labour government will face a slew of challenges and the leadership will want to make headway on their key policy objectives – as a thriving industry it is unlikely the London market will be top of that agenda. But we are well practiced at stakeholder engagement across Westminster and Whitehall, so in both the run up to any election and once the new government is in situ, we will be ensuring that the market needs are articulated as clearly as possible.
