Brexit has also forced thousands of finance professionals to head to the continent and led to London briefly losing its crown to Amsterdam as Europe’s largest share-trading centre.

The economy has also struggled since the pandemic with a cost-of-living crisis, as rising interest rates and market volatility have combined to dent investor appetite. The UK is now one of the worst performing countries in the G7 as a result.

Criticism has surrounded the pace of action by the government since Brexit. There has been limited concrete progress despite a swathe of reviews, including the Kalifa Review of fintech, the Hill Review of listings and Freshfields lawyer Mark Austin’s review of secondary capital raisings.

READ Mansion House Reforms: Government targets listings and pension overhaul to boost City

On 10 July, Chancellor Jeremy Hunt unveiled the ‘Mansion House Reforms’, the latest in a series of measures intended to put the City back on top. The reforms propose unlocking pension capital, loosening listings rules and incentivising startup investment.

The City’s response to his proposals was generally positive.

Charlotte Crosswell, the chair of the government-backed Centre for Finance, Innovation and Technology, told a Barron’s Live panel hosted by Financial News: “It has been a long, long road. Hopefully now we can move at pace.”

The former director of clearing house LCH added: “I know everyone is sitting there getting quite tired of all the reviews, but some of those have been really instrumental. These are really big topics. If you rush into one particular area and then find you have not addressed the other issues, there is a problem.”

“It does take a while to get things through and it still will be further [to go],” added fellow panellist Kate Dawson, capital markets and digital finance sector head for KPMG’s regulatory insights centre.

“We are beginning to see things consulted on in 2020 coming through now… Unfortunately, there is a complex regulatory system that keeps us all busy.”

Dawson said regulatory divergence is adding costs for international companies, which now have to deal with multiple regulatory systems. Nevertheless, the reforms should still boost activity in the City.

No time for distractions

James Palmer, a partner at Herbert Smith Freehills and a member of TheCityUK’s leadership council, said policymakers had found their time taken up by macroeconomic headwinds and could now focus on boosting the UK’s financial services sector again.

“The Brexit vote — it distracted people,” he said. “If you add Covid as well, there’s been unbelievable levels of distraction. Ukraine on top of that; it has been extraordinary.

READ ‘The UK is our home’: Why London’s IPO candidates might still choose the City

“I think we have been beset with policymaking short-termism… Politicians are very focused on GDP growth for the next six months. That is their goal. Actually what we are talking about here are things that will create real growth over 10, 20 and 30 years. To me, that is what is exciting about this. That is why I think it is an opportunity for momentum.

“I think that we are having this debate is unbelievably exciting. The UK could actually steal a march on pretty much everywhere in the world if we get this right. But don’t expect to fix everything in 12 months. This is going to be three to five to 10 years of hard graft.”

Culture wars

Palmer also said it was “preposterous” that far more people were invested in crypto than stocks. The panel said more work needed to be done to encourage savers to put their money in domestic equities.

“Are we going to see the cultural change needed for people to recognise the benefits? The foundations are there, but we need to recognise this won’t happen automatically,” Crosswell said.

A key pillar of the Mansion House Reforms was an agreement by nine pension giants to increase the amount they invest in unlisted shares. The firms, which together own two-thirds of Britain’s defined contribution assets, currently invest less than 1% of their funds in unlisted shares; they have pledged to increase that to 5% by 2030.

The hope is that more domestic investor backing will make a London float more attractive to high-growth firms once they reach the scale to go public.

The panel praised the commitment, but noted it was voluntary on the part of pension companies, as opposed to compulsory.

While the 5% was not enough as it stands, Palmer said he remained “very, very opposed to mandating… Mandating is just heavy-handed government short-termism.”

READ City brokers facing ‘existential crisis’ say Mansion House Reforms come too late

While the government has hit on technical solutions to issues, City grandees have also talked up the need for a more positive tone in the City — to shout about successes rather than complain about headwinds.

Senior government officials including City minister Andrew Griffith have been bullish on the pressing need for reforms to turbocharge growth. Private sector leaders such as London Stock Exchange boss Julia Hoggett and Legal & General chief Nigel Wilson have also come together in a bid to find solutions.

To contact the author of this story with feedback or news, email Justin Cash