The UK’s Business Secretary, Jonathan Reynolds, has suggested that the number of regulators overseeing British industry and commerce might be reduced as part of the government’s broader strategy to stimulate economic growth. Speaking at the launch of a consultation aimed at overhauling the Competition and Markets Authority (CMA), which plays a key role in regulating mergers and acquisitions, Reynolds highlighted concerns that the current regulatory framework could be acting as a barrier to economic success. He emphasized that the government is actively considering whether the existing number of regulators is appropriate, given the feedback from business leaders who consistently express frustration with the complexity and slowness of the regulatory system.
Reynolds pointed out that regulators often appear too focused on theoretical issues, with little understanding of the practical realities of how businesses and markets operate. He also hinted that the reform of state watchdogs may extend beyond the CMA, as part of a broader effort to create a more business-friendly environment. The CMA itself has been in the spotlight recently, with its former chair resigning last month amid government efforts to streamline regulation and remove obstacles to growth. Businesses are now being invited to contribute to reshaping the agency’s priorities, signaling a shift toward a more collaborative approach between regulators and the private sector.
The UK’s regulatory landscape is currently populated by a wide array of bodies, each overseeing different sectors. For example, Ofwat regulates the water industry, while Ofcom is responsible for telecoms and parts of the media. In the financial services sector, multiple overlapping regulators were established in the aftermath of the 2008 financial crisis, including the Financial Conduct Authority, the Prudential Regulation Authority, and the Financial Policy Committee. This complex web of regulators has led to concerns that the system may be overly fragmented and inefficient, potentially hindering business activity and innovation.
Reynolds did not explicitly identify which regulators or responsibilities might be targeted for reform, but he drew a notable comparison with the regulatory approach in the United States. He argued that the divergence in economic outcomes between the two countries since the financial crisis is stark, with the US experiencing stronger GDP growth and higher average incomes. He suggested that the UK could learn from the US approach, which he characterized as bolder and more willing to take risks. Reynolds dismissed the idea that pursuing growth necessarily comes at the expense of consumer interests, arguing that effective regulation should not simply shut down entire areas of business activity but rather find a balance that allows for innovation and competition.
In addition to regulatory reform, Reynolds also touched on other initiatives aimed at supporting UK businesses. For instance, he expressed optimism about securing an exemption from US tariffs on aluminum and steel for UK exports used in the defense industry. He suggested that the UK could make a strong case for such an exemption, given its role as a key ally and its limited impact on the global steel and aluminum industries. This reflects a broader effort to engage with international partners and create favorable trading conditions for British businesses.
Reynolds’ comments have sparked a lively debate about the role of regulation in the UK economy. While some have welcomed the potential streamlining of the regulatory system as a much-needed boost to business confidence and economic growth, others have raised concerns about the potential risks of deregulation, particularly in areas such as consumer protection and financial stability. As the government moves forward with its consultation on the CMA and considers broader regulatory reforms, the challenge will be to strike a balance that fosters growth while maintaining essential safeguards for consumers and the public interest. The outcome of this effort could have significant implications for the UK’s economic trajectory in the years to come.
