Confidence in Chancellor’s growth plans for financial services rises ahead of Mansion House speech

• Over 80% of financial services leaders are confident that the government’s plans will boost sector growth, attract foreign investment and position the UK as a leader in sustainable finance and fintech.
• Over three-quarters of leaders (77%) agree that cutting red tape would support economic growth and sector competitiveness, but the current geopolitical climate is making them more cautious.

Ahead of the launch of the Chancellor’s first-ever financial services growth and competitiveness strategy, sector optimism in the government’s growth plans has increased over the last six months, according to KPMG’s UK Financial Services Sentiment Survey.

The quarterly poll, which tracks sentiment among over 150 leaders working across the sector, found that the biggest rise in optimism in the government’s growth pledge relates to attracting foreign investment into the sector, which has risen by 20% in the last six months. Now 88% of leaders are confident that the government’s plans will deliver this, compared to 68% in December 2024.

Confidence that the government’s sector strategy will boost sector growth and competitiveness has also risen. 86% of sector leaders are now confident the plans will deliver this, compared to 70% six months ago. This is followed by confidence that the government’s growth plans will enhance the UK’s position as a leader in sustainable finance and fintech, which saw a 10% increase from 73% to 83%.

Those with lower degrees of confidence in the government’s plans highlighted challenges related to national insurance and tax increases, inflation challenges and economic uncertainty.

“The UK is the world’s largest exporter of financial services, making the sector fundamental to the country’s economic success. It’s encouraging to see that the government’s growth pledge is already giving sector leaders optimism about the future. This week, the industry will want to see a strategy that sets out bold ambition with clear priorities to unlocking this growth, said Karim Haji, global and UK head of financial services at KPMG. “This is an opportunity for a true partnership between government and the industry to drive genuine, positive change.”

Leaders support the government’s plans to cut red tape, but the current geopolitical climate is making them more cautious

Eight in ten sector leaders are confident that the Chancellor’s plans for regulatory reform will reduce the burden of regulation. The government has already made moves to streamline regulatory structures since taking office, by for example folding the Payment Systems Regulator into the FCA, and over 60% of leaders say that the regulatory burden has reduced since the government came into power just over a year ago. Further plans from the government in its Industrial Strategy include a commitment to reduce the administrative cost of regulation by 25% by the end of this Parliament and the creation of a new unit in HMT which will challenge unnecessary regulation.

Most leaders (77%) agree that cutting red tape would support economic growth and sector competitiveness. However, the current geopolitical climate is making financial services leader more cautious, almost two-thirds (64%) of financial services leaders say they are concerned about proposals to cut regulatory red tape when risks to financial stability are rising.

Karim concluded: “Leaders are already recognising the work that has been done to cut back some regulations and the majority are supportive of the Chancellor’s vision to cut red tape for growth. However, the current geopolitical backdrop is making leaders more cautious about proposals that may have an impact on financial stability. Leaders will expect the government’s strategy for reform to be proportionate to preserve a safe and stable financial system and protect the UK’s robust regulatory regime.”