Truss goes PM – here’s what it means for the city

All eyes are on the City and the aftermath of financial services politics, with Liz Truss confirmed as the winner of the race to become the UK’s next Prime Minister.

Truss will officially take office on September 6 after winning the Conservative Party leadership race by a narrower margin than expected by many polls.

Truss won 81,326 votes to Rishi Sunak’s 60,399, a margin of 57.4% to 43.6% on an 82.6% turnout of Conservative Party members.

In her acceptance speech, the Foreign Secretary described it as “the longest job interview in history”.

The big question now is who will serve in his cabinet and how they will approach the difficult challenges facing the city.

Kwasi Kwarteng, a close ally who lives a short distance from Truss in south-east London and is widely tipped for the role of chancellor, said her administration would be “shameless pro-growth“, while Jacob Rees-Mogg of Somerset Capital, a longtime critic of Brussels and financial regulation, could be moved from Minister for Brexit Opportunities to Business Secretary.

Wokingham MP John Redwood, chief global strategist for fund manager Charles Stanley and a former staffer in Margaret Thatcher’s political unit early in her career, said he was ‘happy to help’ Truss , as reports also suggest it for a return to the Treasury.

So far, reports have not suggested a return for John Glen, the former city minister who spearheaded much of the city’s post-Brexit reform. Glen supported Sunak in the leadership race. He led work on the landmark Financial Services and Markets Bill, which aims to break the city’s regulations away from the EU in the wake of Brexit. The bill is debated in parliament on September 7.

Former investment minister Lord Gerry Grimstone, the former chairman of Barclays and Standard Life, could also be set for a return to government after helping organize events for Truss with key influencers in the city, Bloombergreported.

At their final event in London on August 31, Truss and Sunak said London would be key to the UK’s future growth, stressing the importance of maintaining the city as an attractive place to do business. business.

Speaking shortly before the announcement, Treasury Committee Chairman Mel Stride, a Sunak supporter and one of the most influential politicians in overseeing city policy, said: “Personally, I think it went on too long, it could have been a shorter campaign… Many of us will be happy to draw a line under the contest and continue to govern.

The Truss campaign leaned heavily on tax cuts, including the reversal of the planned corporate tax increase and the reversal of the recent increase in National Insurance contributions, with a ” emergency tax event” to be held shortly.

But financial services firms note that many remain uncertain about the policy outlook ahead.

“Despite the focus on tax during the leadership campaign, all announcements are, of course, subject to change as formal plans are made,” said Sian Steele, tax manager at Evelyn Partners. “As our new Prime Minister grapples with the economic situation, the measures currently planned may be postponed or cancelled, and other measures introduced.”

“The stock market may well have a say in the new prime minister, but the government bond and pound market response could be more telling, at least in the very short term,” said Russ Mould, managing director. investments from AJ Bell. markets express their confidence – or lack of confidence – in a country and its economic and political prospects by how much they charge it to borrow and how they value its currency. In each case, traders and investors are already turning away, probably because they don’t do it like what they see.”

Tory MP for North East Bedfordshire, Richard Fuller, a former management consultant, took over as City Minister when Glen left to protest Boris Johnson’s leadership, but City sources do not expect that he keeps the job once Truss names his top team.

A city attorney with experience working with government officials said Financial news: “Glen clearly knew his stuff. He clearly leaves a hole.”

“We… look forward to engaging with the new Prime Minister and her ministerial team as soon as possible to continue to promote policy priorities that will best encourage and foster a favorable climate for entrepreneurial activity and business growth,” said Jonathan Geldart, chief executive of the Institute of Directors, said.

However, concerns remain in parts of the city that Truss’ campaign promises for greater scrutiny of the Bank of England and financial regulators could lead to greater economic volatility.

Alan Custis, head of UK equities at Lazard Asset Management, said: “The new government faces significant economic challenges and must act quickly to address them. It must show fiscal responsibility to prevent the pound sterling from continuing to decline. decline and can do so by maintaining the independence of the Bank of England.”

Simon Cureton, Managing Director of Funding Options, said: “There are reasons the UK financial sector is so admired overseas, including the rule of law, regulation and expertise that resides in the Square Mile and beyond. ‘ should be handled with care.

“We welcome Liz Truss’ evident passion for the city as the ‘jewel in the crown’ and are confident that she has the fintech community as much as established institutions in mind as she sets her economic agenda in the following months.”

How we got here and what you need to know

We will reduce the bureaucracy of the city, the engagement of Sunak and Truss

Sunak defends giving politicians the power to overrule regulators

‘Clearly a bad idea’: Compliance experts slam Liz Truss for talking about merging FCA and PRA

Brexit bill pits politicians against regulators: ‘It’s a recipe for disaster’

Sunak-Truss battle for prime minister: See how the city is divided as the leadership vote begins

City politician wants next PM to settle EU relations: ‘We shouldn’t see them as an enemy’

City leaders back Boris’ ‘radical change’ for next PM

Brexit supporter could suit City as Boris’ messy term ends

Rishi Sunak is rapidly gaining momentum in his race to become prime minister

Boris’ resignation rocks City: ‘We’re not out of the woods yet’

Boris faces ‘horror among Tory voters’ in City as leadership vote looms

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

Lance B. Holton