ALEX BRUMMER: Conservative leadership threat to Square Mile

The clattering train of government has not been brought to a total halt by the shenanigans in the Tory party. 

Desirable tax changes, including the reversal of next year’s swingeing corporation tax rise from 19 per cent to 25 per cent, are off the Cabinet table but will feature on the hustings. 

In the City, a new chairman for the Financial Conduct Authority (FCA) comes none too soon. Ashley Alder has been plucked from the Securities and Futures Commission in Hong Kong, not always the happiest of hunting grounds for City enforcers. 

Political vacuum: One of the great potential wins for Britain outside the EU is the ability to cut itself loose from Brussels red tape

Martin Wheatley, the Hong Kong regulator-turned-FCA chief who ‘promised to shoot now and ask questions later’, was removed in 2015 by then Chancellor George Osborne. He managed to wipe billions of pounds off the stock market value of UK insurers with an ill-timed briefing. 

The FCA could do with an injection of energy. Unfortunately, Alder will not be making an immediate difference as he won’t start his £170,000-a-year job until 2023. 

As a Hong Kong regulator, it would be fascinating to know what Alder did to preserve freebooting capitalism there during Beijing’s clampdowns on political and economic freedoms. One also wonders what he made of the London Metal Exchange’s (LME) botched handling of the nickel market at the outbreak of the Ukraine war. 

The Hong Kong Stock Exchange owns the LME, which is the subject of an unpublished probe by the Bank of England and the FCA. 

It was hoped that the arrival of Nikhil Rathi as the FCA’s chief executive, after the leadership of Bank Governor Andrew Bailey, would see the backlog of unfinished business cleared. 

A dozen years after the great financial crisis a report into managerial culpability at Halifax Bank of Scotland (HBOS) is still tied up in legal knots. 

The outcome of another quest to find out whether there was a cover-up by Lloyds, over the fraud at the former HBOS branch in Reading, is still unknown. 

This writer and many readers await publication of a probe into how up to £1billion of savings were placed at risk when Neil Woodford’s investment funds were shuttered in 2019. The scandal is a permanent shadow over the FCA, the authorised director of the Woodford funds Link and investment platform Hargreaves Lansdown, which shamelessly promoted the crashed outfit. 

If all this were not enough, the FCA has been the subject of ill-tempered industrial action and is tasked with getting Brexit done for the financial services sector. 

It doesn’t help that the City Minister John Glen, trusted in the Square Mile, is a victim of the Tory leadership struggle. 

One of the great potential wins for Britain outside the EU is the ability to cut itself loose from Brussels red tape. 

As the Bank of England’s top regulator Sam Woods has noted it is a ‘once-in-a-generation opportunity to reshape insurance regulation’. Whether that can happen in a political vacuum is unclear. 

Nigel Wilson, chief executive of insurer Legal & General, wants early action on an overhaul of the rules. 

If it doesn’t happen, prized investment in infrastructure could escape to the US and elsewhere. The self-inflicted Tory leader ship tussle exposes the Square Mile to serious jeopardy.

Blunted arrows 

Very few Japanese politicians have left as great a mark on the global economic thinking as Shinzo Abe. His assassination is a tragedy not just for the Japanese people but for radical ideas. 

Abe’s ‘three arrows reform’ of flexible fiscal policy, monetary expansion and structural reform jolted Japan out of the inertia which led to the ‘lost decade’ after the collapse of its real estate bubble and a period of deflation. 

When I reported on the crisis two decades ago, Japan seemed a lost cause. 

Parks were turned into neat, tented cities for the unemployed, and families were trapped in negative equity. 

Since then there have been bursts of innovation, with Japan at the front of the pack with hybrid and hydrogen cars, advanced electronics and carbon fibre for a new generation of aircraft. 

Abe’s $116billion fiscal package in 2013 was designed to restore a consistent 2 per cent level of growth. Targets were not fully achieved but Abe hauled Japan back from deflation, restoring faith in capitalism when the postwar miracle looked to have dissipated. 

His legacy will not be forgotten.