Crypto News: This Labour chancellor needs the City

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The Labour party, when in government, has endured a slightly awkward relationship with the annual financial services dinner at Mansion House. After all, nothing quite says "power to the people" like standing next to the Lord Mayor and the grandeur of his 18th-century, Grade 1-listed residence.

But while Gordon Brown (in)famously distanced himself from any stuffiness around the traditional speech — by insisting on wearing a lounge suit when black tie was expected — Labour's current chancellor of the exchequer may take a more familial approach to the financiers and other City of London representatives at tonight's event.

Why? Because Labour needs growth, and it knows the financial sector is crucial to delivering it. Rachel Reeves' budget of a fortnight ago is expected to give the economy a short-term Keynesian kick up the rear, yet the effect will quickly wear off. Her tax hikes threaten to weigh on demand too, and that's before we get on to portents of a global trade war.

It leaves a huge burden on Labour's reforms to planning, pensions and anything else they can do to push more capital into British investments.

A Mansion House dinner in 2022 Photographer: Chris Ratcliffe/Bloomberg

Reeves will be flanked by fellow Treasury minister Emma Reynolds, who until earlier this year was a managing director at Square Mile lobbying group TheCityUK. Their ambition of pooling £1.3 trillion of pensions savings into "megafunds" is broadly considered to be wise, assuming it comes to fruition, but won't be sufficient.

The government still has to convince more fund managers and global investors to put cash into riskier UK assets and projects, and faces the question of how to increase capital pools overall — such as by lifting auto-enrolment contributions, or somehow revitalizing London's equity markets.

Without significant progress in these areas, it's hard to see how the country will meaningfully boost its rate of growth over the next five to 10 years. So expect a lot of talk this evening of economic growth, free trade, capital, investment and even deregulation. Hardly traditional Labour fare, but as the first rule of speechwriting goes: know your audience.

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