The Treasury believes that relaxing financial regulations will enhance growth, a notion that lacks substantial evidence and may increase systemic risks. In an effort to maintain London’s financial attractiveness post-Brexit, it has proposed easing rules for alternative asset managers, despite the lessons learned from the 2008 financial crisis about the dangers of lax regulation. This aligns with Rachel Reeves’s view that a larger financial sector promotes economic prosperity, while the chancellor argues that previous post-crisis regulations, including those on alternative investment funds, were overly restrictive.
