Shadow Chancellor Mel Stride has issued a stark warning that the UK's financial services sector must be supercharged with radical deregulation or risk losing its global status. The senior Conservative MP argued that the regulatory pendulum has swung too far towards eliminating risk, stifling the City's potential.
A Call for a Regulatory Bonfire
In a direct challenge to the current government's stance, Stride called for a "bonfire of regulation" to power up the industry. He expressed fear about where the City would "start to drift" if efforts to tear down burdensome rules were not prioritised. His comments position him as advocating for a significantly more aggressive approach than the current City minister, Labour's Lucy Rigby, who recently stated that banks were finally off the "naughty step".
Stride's vision is unequivocal: he wants to see City banks "put into a rocket and turbo-charged". This rhetoric underscores a deep-seated concern within parts of the Tory party that the UK's premier financial district is being held back by post-financial crisis rules that have not evolved with the times.
The Rocky Road to the Autumn Budget
The shadow chancellor's intervention follows a period of extreme volatility for UK banking stocks in the lead-up to Chancellor Rachel Reeves's second Autumn Budget on 26 November 2025. The sector faced intense speculation about a potential tax raid, leading to a period of frenzied lobbying and briefings dubbed the 'Leaky War'.
The uncertainty took a tangible toll on bank valuations. In late August, a report from the left-leaning Institute for Public Policy and Research (IPPR) proposing an £8bn annual tax on bank profits triggered a sharp sell-off. NatWest shares alone fell 5% in a single session, wiping nearly £2.5bn from its market value. The FTSE 100's Big Five banks, including Lloyds, Barclays, HSBC, and Standard Chartered, collectively lost around £8bn.
Budget Reprieve Unleashes Investment Pledges
When the Budget ultimately spared lenders from new taxes, the response from the industry was swift and positive. A wave of major investment announcements for the UK economy followed within 24 hours:
- JP Morgan committed to building a new £10bn skyscraper in Canary Wharf, cementing its largest European presence.
- Goldman Sachs pledged "several billion pounds" for UK infrastructure and plans to add 500 jobs at its Birmingham site.
- Lloyds Banking Group unveiled £35bn of new finance for 2026 for companies operating in the UK.
- Barclays promised to boost support with a further £45bn in lending to UK businesses and consumers.
This flood of capital commitments highlights the sensitive relationship between government policy, regulatory sentiment, and institutional investment. For Mel Stride, the lesson is clear: a proactive, deregulatory stance is not just about freeing banks, but about securing the UK's future as a financial powerhouse. The debate is now set between gradual reform and the 'rocket' of radical change he demands.
