Business paints bleak picture of UK attractiveness

A panel of financial service veterans on Wednesday painted a bleak picture of the UK's attractiveness for big business after the May general election.

Describing an "adversarial" regulatory environment, four prominent leaders from the City of London financial hub told an audience at Bloomberg that profit-makers had become the UK's "whipping boys" while political manifestos were filled with populist giveaways.

Michael Spencer, chief executive of ICAP and former treasurer of the Conservative party, said banks had become scapegoats for the financial crisis, while Nicola Horlick, chief executive of peer-to-peer lending platform Money & Co, accused politicians of "raiding the piggy bank". The group suggested the UK's regulatory environment reflects these attitudes.

"The regulatory tide continues, so we generate more and more pointless bits of paper which nobody knows how to enforce . . . sadly [this] doesn't feature in any of the manifestos," said Jon Moulton, founder of private equity firm Better Capital and former donor to the Conservatives.

He conceded the deficit was the biggest deterrent for businesses, but said a Labour government would prolong the problem.

"There's definitely a risk to the economy from running a large deficit, particularly if we've got Labour and the SNP together," he said.

The Labour manifesto, launched on Monday, aims to reassure voters of the party's fiscal discipline through promises of a "budget responsibility lock" on the deficit, but its efforts evidently failed to please the panel, who argued it would be a "disaster" if Ed Miliband became prime minister.

Mr Spencer declared sterling would "take a thumping" under a Labour government and capital markets experience an overall "rollercoaster". Mr Moulton said the "rollercoaster" was more likely to be "a continuous decline", if Mr Miliband took power.

Sterling fell to a five-year low last week as investors priced in uncertainty over next month's election results.

Speaking about the market impact of Brexit, Mark Boleat, chairman of the policy and resources committee of the City of London, said a referendum on EU membership would be important to making "a new settlement" with the electorate.

"I think the momentum at some point for a referendum, in my opinion, is virtually unstoppable," he said, adding that a referendum "would be bad for business, bad for the City".

Ms Horlick offered a more optimistic vision. "These things are always perceived as being worse than they actually end up being . . . [politics] is like a massive supertanker, you can't simply turn it in a different direction," she said.

She conceded that policy makers had so far adopted a "soft touch" approach to fintech companies such as Money & Co.

"It's extremely good news for us . . . on the one hand they're tightening the screws on the banks and on the other hand they're giving us an easy ride," she said.

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