Category Archives: Business

Growth vs Guardrails: Reeves and the FCA’s contrasting visions for consumer finance regulation

GK’s Joshua Owolabi assesses Chancellor Rachel Reeves’ and FCA Chief Executive Nikhil Rathi’s differing perspectives on consumer finance regulation and the potential impact on the sector

The Chancellor Rachel Reeves insists that the government’s main objective is to facilitate economic growth and believes that the UK’s regulatory bodies should support this objective. In January 2025, the Chancellor wrote to several regulators, including the Financial Conduct Authority (FCA), directing them to ‘tear down regulatory barriers’ that hold back economic growth. This view is likely to have a significant impact on the regulation of consumer finance during the rest of this parliament (expected to end in 2029).

Since the 2008 financial crisis, the FCA and its predecessor the Financial Services Authority, have generally preferred to strengthen consumer finance rules to prevent the harm to consumers that occurred following the crisis (e.g. consumers being forced into high-interest loans without fully understanding the long-term impact on their finances). The pressure placed on the FCA could result in a reversal of long-term regulatory trends in the consumer finance sector, reducing compliance requirements on businesses across the sector.

Across several consumer finance sub-sectors, such as mortgages, motor finance, and personal loans, the FCA has spent the last decade implementing stricter measures to prevent the mis-selling of products and services, and to protect consumers from taking on excessive debt. These efforts culminated in the implementation of the Consumer Duty in July 2023. The Duty is a regulatory framework requiring firms to prioritise consumers’ needs. Firms must proactively identify the specific needs of each of their customers and prevent risks that could result in financial harm. This involves providing customers with clear financial advice on products like hire purchase agreements, which are common in the motor finance industry, so that they can make informed choices. It also involves making it as easy as possible for customers to switch or cancel products without incurring unnecessary debt.

Rachel Reeves’ belief that financial services regulation should encourage innovation, competitiveness, and increased risk taking in lending and investment is at odds with recent FCA consumer protection measures. This has resulted in contrasting messages from Reeves and FCA Chief Executive Nikhil Rathi. While Rathi has said the FCA will support innovation and economic growth, he has voiced concerns that the push to prioritise growth will result in an increase in financial scandals. He has warned the government and parliamentarians that there may need to be an ‘enduring acceptance’ of these failures as regulations are relaxed. Rathi’s concern is not a surprise. Since his appointment as Chief Executive in 2020, he has consistently emphasised the importance of consumer protections and market stability. Under his leadership, the FCA has prioritised improving affordability checks so that firms are not just doing basic credit checks and consumers understand the true cost of products.

An area where major change is likely to occur, despite Rathi’s reluctance, is in the balance between regulation and access to credit. Reeves has argued that excessive regulation can make it harder for consumers to borrow money, slowing economic growth. As a result, the government announced in May 2026 that it would reform the Consumer Credit Act 1974 (CCA), which established standard procedures for credit and hire agreements and sets out consumers’ rights when dealing with businesses in those sectors. The government says that its reform of the CCA is focused on modernising consumer credit rules so that they better reflect the realities of today’s digital financial market. It has stated that its main objective is to improve the quality and clarity of information provided to consumers. The government argues that current disclosure requirements are outdated, overly complex, and often overwhelm borrowers with lengthy legal documents that are difficult to understand. The government has said that the CCA reforms will help consumers make better-informed financial decisions and reduce the risk of individuals taking on unsuitable or unaffordable credit.

The government is likely to say that the primary reason for reforming the CCA is its desire to protect consumers. However. the push for economic growth and deregulation in financial services is what is truly driving these reforms. In reality, the core goal of the reforms is to reduce the number of detailed regulatory requirements that are entrenched in legislation and to give the FCA more power to amend regulations quickly without the passing of new legislation. By giving the FCA greater responsibility for setting consumer credit rules, the government hopes to create a more agile regulatory system that can respond more quickly to innovations in financial products, such as fintech and embedded finance. This is likely to lower compliance costs for businesses in the consumer finance market and reduce the likelihood that they fall foul of rules relating to the way in which credit agreements are written or structured.

Ironically, the changes to the CCA, including the increased role of the FCA in modernising credit rules, will place greater power in the hands of Rathi to regulate consumer finance, despite the difference in views with the Chancellor. Rathi will now need to oversee the implementation of changes to the CCA, while also overseeing other consumer finance reforms that have already been announced. For example, the FCA has said that it will complete a review of the Consumer Duty before the end of 2026 to understand firms’ approaches to monitoring consumer outcomes and how well consumers understand risk. The FCA believes that some firms are struggling to provide clear evidence that they are improving outcomes for consumers or that their advice is specific to each individual customer’s needs. This means that there is a scenario where firms will have requirements relating to affordability checks reduced by the CCA reforms, only to see new requirements placed on them to collect data on consumer outcomes following the review of the Duty. The implementation of both these reforms is an unenviable task for Rathi, as he seeks to balance pressure from the Treasury to support economic growth with his own regulatory agenda. The FCA will need to engage with firms to ensure that they are fully aware of the expected changes to the regulatory framework and that firms are not confused by the mixed messaging from the Treasury and the regulator itself.

Will the Chancellor’s ‘securonomics’ strategy drive growth in a new age of instability?

Throughout her time as Chancellor, Rachel Reeves has insisted that the government’s main objective is to facilitate economic growth. During her Mais Lecture on 17 March 2026, Reeves set out a vision for long-term economic growth, using the speech as an opportunity to highlight the ways in which the government will overcome challenges such as fiscal constraints, low productivity, and global instability.

Reeves reaffirmed her belief in ‘securonomics’, an economic strategy where the government helps individuals and businesses gain economic security by investing strategically in sectors like technology, financial services, science and infrastructure. Reeves emphasised that the government needed to play a more active role in guiding investment given the impact of the middle east conflict on the global economy. She stated that market disruptions caused by the COVID-19 pandemic, the Ukraine-Russia war, and the US-Israel war with Iran meant that ‘globalisation, as we once knew it, is dead’. As a result, the government would need to find balance between building resilient public services and facilitating private sector growth, as well as a balance between importing goods and products from other countries and bolstering domestic supply chains.

A central theme of the lecture was the ‘big choices’ the government is making to shape the UK economy over the next decade. The Chancellor placed significant emphasis on securing closer ties with the EU, arguing that it was essential for future growth. She stated that a closer alignment could reduce trade barriers. Reeves acknowledged that Brexit has had a negative impact on the UK economy, a shift from previous years where she had shied away from being overtly critical of Brexit. Reeves stopped short of expressing support for rejoining the EU, instead stating that the UK could find greater alignment with Brussels on policy, while still operating outside the EU’s formal structures. If the government is successful in forming a closer relationship with the EU, she remarked, it could ease the administrative and customs costs for businesses importing from and exporting to the European Union.

While business owners will be pleased to see the Chancellor discussing reducing trade barriers with the EU, Reeves’ attempt to set out a vision for regulatory alignment with the EU may be more concerning for businesses. Reeves said that the government would be prepared to align with EU regulation where it is in the ‘national interest’ to do so, and would maintain regulatory autonomy in sectors with strategic importance for the UK. However, this ignores the post-Brexit reality – the UK and the EU are growing apart on their regulatory goals.

Recent UK governments have increasingly highlighted their ability to implement more flexible approaches to regulation than the EU as a selling point to attract global business. Reeves herself wrote to 17 regulatory bodies in January 2025 urging them to ‘tear down regulatory barriers’ and focus on opportunities to facilitate economic growth. For example, Reeves has implored the Financial Conduct Authority to reduce ‘anti-risk’ regulations and improve competitiveness in financial services sub-sectors, including consumer finance. This is a significant contrast from the EU’s approach, which is more precautionary and is unlikely to result in the reduction of detailed consumer protection rules. If the government does pursue regulatory alignment with the EU in financial services, it would need to consider the impact on regulations, such as affordability assessments and disclosure requirements. Altering these regulations could increase compliance costs for businesses and would likely upset management teams that have spent the last five years adapting to the UK’s Consumer Duty.

The Chancellor also argued that technological advancement is critical to boosting productivity, creating jobs, and positioning the UK as a global leader in emerging industries. As part of this plan, Reeves said the government will support regional growth through fiscal devolution that will empower local leaders, and will also create sector hubs in different cities. This includes establishing Leeds’ Northern Square Mile as a destination for global financial services. To support regional growth the government will create new city-level investment funds and allow regions to retain more of the tax revenues they generate, with the aim of stimulating local investment and reducing reliance on central government.

Reeves commitment to supporting technological innovation in financial services, as well as facilitating growth across the country is likely to provide opportunities to businesses in emerging financial services sub-sectors that harness AI and machine learning. Tech-focused sub-sectors, such as embedded finance, could benefit from these plans, including businesses providing payments and money transfers services, peer-to-peer lending services, and insurtech services. Investors focused on these sectors should monitor the government’s progress in establishing finance or technology sector hubs in various cities across the UK, as well as any funding announcements relating to these sectors.

The Mais Lecture reinforced a consistent economic strategy centred on stability, investment, and reform. While the lecture did not introduce any new policies, it did clarify the government’s long-term economic goals and Reeves’ commitment to ‘securonomics’. However, Reeves will need to use the coming months to share further details on the extent to which she wants key sectors within the government’s industrial strategy, such as the financial services and technology sectors, to be aligned with the EU on regulation. The Chancellor is ‘optimistic’ about the government’s ability to drive investment and growth but will need support from the business community to do so. Investors and businesses should consider potential scenarios where they can support the government to ensure that policy, funding and regulation is geared towards creating the best possible environment for growth in the UK.

If you would like to discuss the Chancellor’s growth strategy and its impact on businesses in more detail, please get in touch with joshua@gkstrategy.com.

What impact will data centres have on the UK’s ability to meet its net zero ambitions?

Data centres have been subject to significant scrutiny in recent years, particularly in relation to their impact on the government’s net zero agenda. In correspondence sent to the cross-party Environmental Audit Committee on 20 February 2026, the Secretary of State for Energy, Security and Net Zero Ed Miliband admitted that energy future demand from data centres, and its interaction with the UK’s net zero ambitions, remains ‘inherently uncertain’.

The government has designated data centres as ‘critical national infrastructure’ given they support nearly all economic activities as well as the day-to-day running of public services. Forecasts undertaken by trade association TechUK suggest that data centres have the potential to contribute an additional £44 billion to the UK economy by 2035, highlighting their strategic importance to the government’s economic growth agenda. The government recognises the important role data centres will play in our economy, evidenced through its commitment to deliver nearly 100 new centres over the next five years. Nonetheless, this has led to environmental groups seeking clarity from the government on how it will deliver this ambition while meeting its environmental obligations.

Under plans to expand the number of data centres, policy challenges have been raised by the wider energy sector and industry bodies, particularly around their use of energy and water. In March 2022, the National Grid Electricity System Operator (ESO) estimated that data centres consume around 2.5% of the UK’s electricity. It is likely that data centres’ electricity consumption will increase significantly over the coming years. Forecasts published by Oxford Economics in December 2025 estimate that data centres’ demand will represent 30.4% of UK’s commercial electricity consumption by 2030.

Alongside rising demand for electricity to power data centres, there is widespread debate about their impact on the water sector. In a report published by the government’s Digital Sustainability Alliance’s (GDSA) in September 2025, global water usage is predicted to increase from 1.1bn cubic metres to 6.6bn cubic metres by 2027. There is limited data available on how much water data centres use given there is currently no obligation for centres to report their water consumption. It is unsurprising therefore, that there are a range of opinions around this issue. While trade associations like TechUK challenge the notion that data centres are ‘inherently water intensive’, non-profit organisations such as Global Action Plan, have criticised the sector’s lack of transparency.

Despite the uncertainty of the sector’s capacity to support the government’s net zero ambitions, there is appetite, particularly from parliamentarians, to better understand the environmental impact of data centres. Last month, the Environmental Audit Committee launched its own inquiry into the risks and opportunities of data centres in the UK, with the committee inviting submissions from interested parties until 6 April 2026. Parliamentarians have also launched a new All-Party Parliamentary Group  to examine the impact of data centres on economic growth and the UK’s net zero ambitions.

As an essential infrastructure for digital storage and the wider economy, there is potential for data centres to help facilitate rapid economic growth for the UK. While data centres are starting to come under scrutiny from parliamentarians regarding their impact on the environment, there is scope for the sector to engage with government which will be very much in listening mode. The government acknowledges the value of data centres but in order for businesses operating in this sector to succeed, the sector will need to challenge the notion that it will constrain the government’s environmental agenda.

If you would like to discuss the impact of data centres and the government’s net zero agenda in more detail, please reach out to Noureen Ahmed at Noureen@gkstrategy.com.

Trump’s Maritime Strategy Opens New Waters for U.S. Shipbuilding Industry

By Erin Caddell, Anchor Advisors, in partnership with GK Strategy

A recently announced Trump Administration plan for the U.S. maritime industry is likely to open new opportunities for U.S.-focussed companies, investors, training businesses and even real-estate developers interested in reigniting the domestic shipbuilding industry and its related value chain – while presenting commensurate challenges in invigorating an industry that has been forsaken in favor of foreign competitors for decades.

Entitled “America’s Maritime Action Plan”, the proposal released last month responds to a long-held but still shocking fact: that despite boasting the world’s largest economy, a long history of engineering and technological innovation at sea, and over 150,000 kilometers (95,000 miles) of shoreline, less than 1% of the world’s ships are built in the U.S.

It was not always so. U.S. shipbuilding was key to Allied success in both world wars. The U.S. remained the world’s largest shipbuilder as late as 1975, according to the U.S. Trade Representative. The decline of domestic shipbuilding echoes that of many American manufacturing sectors in the post-World War II era, with foreign countries using cost advantages in labor and materials to siphon away an industry once dominated by American companies. Today, 74% of the world’s commercial ships, 80% of ship-to-shore cranes and 96% of shipping containers are built in China, according to the White House. U.S. reliance on foreign shipping presents a national-security risk commonly cited by Republicans and Democrats as rivalry between China and the U.S. has intensified.

The Maritime Action Plan was set in motion by an executive order signed by President Trump in April 2025 and attempts to address this imbalance. It focuses on four pillars: 1) Rebuild domestic shipbuilding capacity; 2) Reform maritime workforce education and training; 3) Protect the maritime industrial base; and 4) Enhance national security, industrial security, and industrial resilience.

The Action Plan also recommends establishing Maritime Prosperity Zones (MPZs) would be modeled on the Opportunity Zones (OpZones) included in the Tax Cuts and Jobs Act (TCJA), the tax bill passed by Trump Administration and the Republican-controlled Congress in 2017. OpZones are census tracts designated as economically distressed areas where investors can receive tax benefits for long-term investments. OpZones were made permanent and the tax incentives expanded further in federal legislation passed in July 2025. The Action Plan recommends establishing 100 MPZs, ensuring these areas are geographically diverse and include regions outside traditional coastal shipbuilding centers.

What does this mean for companies and investors? Like many government white papers, the Maritime Action Plan is loaded with recommendations and big ideas, many of which are unlikely to become reality. And the plan acknowledges that a number of its initiatives would require Congressional legislation (see below), many with funding required – not an easy task given partisan rancor in Washington, D.C, and high U.S. budget deficits. Nonetheless, the plan touches a nerve as both U.S. political parties have grown more concerned in recent years about reliance on China in a number of industries from pharmaceuticals to rare earths to solar panels. We do see the Trump Administration continuing its focus on domestic shipbuilding given its focus on reshoring American manufacturing activity and reducing dependence on foreign partners for critical infrastructure. Democrats would likely support many of the work streams outlined in the Action Plan as well, especially as the investments outlined would help both red and blue states (many U.S. shipyards are heavily staffed by union workers, a traditional Democrat constituency). A contact who attended a recent annual U.S. shipbuilding conference reported that attendance was double or more the year before, with discussions dominated by the Administration’s new maritime strategy.

Revitalizing the domestic shipbuilding industry and its related labor and supply chains will take years. But in the interim, other opportunities may well present themselves to maritime operators and their owners: domestically made and operated software to track ships; the aforementioned Maritime Prosperity Zones; and revitalized maritime education and training programs, just to name a few. In a fractious Washington – one in which control of the seas have come rapidly to the fore again through the recently U.S.-initiated conflict in the Gulf – the U.S. domestic maritime industry may well set sail.

Want to learn more? Reach out to GK’s U.S. partner Erin Caddell at e.caddell@anchor-advisors.net.

From Policy to Production: The EU’s Industrial Accelerator Act

The journey was long and the debates fierce. While the European Commission had initially scheduled its official presentation for November 25, 2025, it was only on March 4, 2026, that the Industrial Accelerator Act (IAA) was finally unveiled.

Justified by the imperative of economic security, this initiative marks a major turning point in the Union’s economic strategy. It aims to strengthen supply chain resilience while safeguarding the continent’s industrial capacity.

First mentioned in the Clean Industrial Deal under the name Industrial Decarbonisation Accelerator Act, the text was intended to stimulate demand for clean European products by introducing sustainability, resilience, and European preference criteria into both public and private tenders.

Although the final regulation has dropped the “decarbonisation” label, it retains its core essence. The Commission has set an ambitious sovereignty target: to increase the share of manufacturing industry to 20% of European GDP by 2035.

However, this text is the result of a laborious compromise. In the face of reluctance from certain Member States and internal tensions between several Directorates-General, some flagship measures had to be substantially reworked before reaching this final version.

Streamlining Industrial Procedures

Several measures within the IAA aim to facilitate and strengthen the deployment of industrial manufacturing capacities.

Facilitating Permit-Granting Procedures

This applies specifically to permit-granting procedures for industrial manufacturing and decarbonisation projects. Member States are required to establish a single application procedure, grouping all necessary permits within one application, accessible through a single access point.

A designated competent authority, responsible for coordinating the process, has 45 days to either acknowledge the application as complete or request any missing information. At the same time, all energy-intensive industry decarbonisation projects benefit from preferential treatment: they must be able to rely on the accelerated procedures provided for by the NZIA (Net-Zero Industry Act), as well as the environmental assessment streamlining measures proposed by the Commission in February.

Creation of Industrial Manufacturing Acceleration Areas

The regulation also mandates each Member State to designate industrial manufacturing acceleration areas on its territory.

Designed as true clusters of “industrial symbiosis,” these areas must provide a reinforced competitiveness framework. This includes the streamlining of procedures and the pooling of infrastructure, as well as access to financing, support for research and innovation, and the provision of a skilled workforce.

These areas are intended to prioritize manufacturing sites for sectors identified as strategic, namely:

  • Certain energy-intensive industries: manufacture of paper, coke and refined petroleum products, chemicals, rubber and plastic products, other non-metallic minerals, and basic metals;
  • The automotive industry: manufacture of motor vehicles, trailers, and semi-trailers;
  • Net-zero technologies identified in the NZIA (notably batteries, solar PV, and hydrogen).

Developing Demand for Clean European Products

One of the primary objectives of the IAA is to foster the emergence of lead markets for certain products in strategic sectors by imposing European origin requirements, low-carbon intensity criteria, or a combination of both.

An Outward-Looking European Preference

Arguably the most sensitive point of the text, the Commission’s proposal outlines, for the first time, the contours of a European preference (outside the field of defense). The IAA thus conditions access to certain public procurement contracts or public support schemes on compliance with a European origin criterion for the products supplied.

Regarding industrial production, only a few specific products are targeted:

  • Concrete and mortar, as well as any product whose performance depends mainly on these materials (including clinker and cement), intended for buildings and infrastructure. The required share of European origin is set at 5%.
  • Aluminium, and products whose performance depends mainly on it, used in buildings, infrastructure, and the automotive sector. The European origin threshold here is 25%.

For the automotive sector, the origin criterion applies only to pure electric vehicles (PEV), off-vehicle charging hybrid electric vehicles (OVC-HEV), and fuel-cell electric vehicles (FCEV) that are purchased, leased, rented or hire-purchased.

To satisfy this criterion, several conditions are set, such as final assembly within the Union, the integration of at least three main specific battery components originating in the EU, or a ratio where the total ex-works price of vehicle components (excluding the battery) originating in the Union represents at least 70% of the total ex-works price of all components. Specific conditions are also provided for small electric vehicles in the new M1E category, introduced during the automotive package of December 2025.

However, far from Chinese-style protectionism or the “Buy American Act,” this European version represents a middle ground between the need for protection expressed by part of European industry and the commitment of certain Member States to international trade.

This balance relies on several limitations, whether in the scope of public procurement and public support schemes affected by this European preference (see Articles 11 and 12), or in the actual location of the production country.

Indeed, Articles 8 and 9 specify that content originating from partner third countries (signatories of a free trade or customs union agreement, or parties to the WTO Agreement on Government Procurement) is deemed to be of Union origin.

Introduction of Low-Carbon Content Requirements

The IAA also imposes carbon emission requirements for certain products supplied in the context of public procurement or projects benefiting from public support. These requirements target concrete, mortar, and aluminium under the same conditions as the European origin criterion, but also include steel. Indeed, the proposed regulation stipulates that at least 25% of steel (as well as any product whose performance depends mainly on this material) intended for buildings, infrastructure, and motor vehicles, must meet low-carbon criteria.

The framework for assessing this low-carbon character varies depending on the nature of the products:

  • For construction products: it will be determined based on harmonised technical specifications or European Technical Assessments (ETA) adopted under the Construction Products Regulation (CPR).
  • For other products: the assessment will be based on the ecodesign requirements set by the ESPR (Ecodesign for Sustainable Products Regulation).

Enhanced Screening of Foreign Direct Investment

While remaining open to Foreign Direct Investment (FDI), the EU is establishing – via the IAA – a stricter framework for large-scale projects in strategic sectors (batteries, electric vehicles, photovoltaics, and critical raw materials).

From now on, any investment exceeding €100 million in a sector where a single third country controls more than 40% of global manufacturing capacity is subject to explicit approval. This decision falls either under a competent national authority, which each Member State is required to designate, or directly under the European Commission.

To be granted the authorization, the investment must satisfy at least four of the six compliance criteria established by the regulation. These criteria concern:

  • The degree of control exercised by the foreign investor over the European entity;
  • Guarantees for the protection of intellectual property;
  • The share of research and development expenditure localized in Europe;
  • The proportion of the workforce employed within the Union;
  • The level of sourcing of inputs of European origin.

If you would like to discuss the impact of the EU’s Industrial Accelerator Act in more detail, please do get in touch with the GK team or our European partner, Euros / Agency.