City bosses upbeat about Labour plans to cut red tape, KPMG says
City bosses are increasingly optimistic about Labour's plans to slash regulation, according to a survey, with more than half saying they plan to hire faster in 2025.
Polling by consultancy KPMG found seven in 10 financial services bosses think the policies will help attract foreign investment into the sector.
Over half said they planned to boost hiring next year, while 17 per cent said they were planning a 'significant' recruitment drive, the research found.
In her first in her first Mansion House speech in November, Rachel Reeves vowed to tear up red tape for the City of London, claiming that regulation after the 2008 financial crash had 'gone too far'.
KPMG head of financial services, Karim Haji, said the City's optimism was 'encouraging'.
But he said 'concerns' remain around the impact of the Budget on the sector.
Pledge: Rachel Reeves has vowed to cur red tape across the financial sector
The respondents with less confidence in the Chancellor's plans pointed to increased tax for businesses outlined in the October spending statement.
Reeves raised the amount employers must pay on national insurance contributions from April, while also upping the minimum wage.
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The policies are designed to pay for better public services such as transport and the NHS, but have attracted criticism from some sectors for making it more expensive to hire people.
Haji added that finance bosses would want 'more details on the Government's competitiveness strategy to really understand how the Chancellor is proposing to work with them' next year.
Nonetheless, more respondents to the survey are confident their firms will be profitable in 2025 than at the same point last year.
Around 94 per cent said they think they will turn a profit in the first quarter, up 11 percentage points from 83 per cent in the first quarter of this year.
Among bosses' main concerns are the ongoing effects of inflation and subsequent high interest rates, which are set by the Bank of England.
Geopolitical risks were cited by the fewest leaders as the top challenges heading into 2025.
Firms said junior and middle management roles will attract the most hiring, followed by apprentices.
Almost a third said whether they can attract qualified candidates would be a major factor in hiring, followed by about a quarter citing increased NICs.
Haji said: '2024 has been a challenging year with financial services firms facing the headwinds of higher interest rates, inflation and geopolitical uncertainty.
'However, the sector goes into the new year with optimism about growth and profitability, coupled with strong intentions around hiring.'
A separate survey by the Confederation of British Industry recently found firms were expecting to reduce both output and hiring, adding to the wider picture of a jittery economy.
Alpesh Paleja, the CBI’s interim deputy chief economist, warned the economy was 'headed for the worst of all worlds'.
Revised official figures published on 23 December showed that the economy had zero growth between July and September.
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