UK Chancellor Reeves Unveils Broad Mortgage, Financial Sector Reforms

UK Chancellor Rachel Reeves is under intense pressure as the economy stagnates and her plans to balance the budget face setbacks, leading her to unveil significant reforms aimed at boosting the financial sector and easing mortgage lending rules. Her so-called Leeds Reforms include easing capital requirements for banks, simplifying senior management appointments, promoting retail investment, and allowing more borrowers to take mortgages exceeding 4.5 times their income, alongside a new permanent government mortgage guarantee scheme for low-deposit buyers. While these measures are intended to stimulate growth and make London more competitive, critics warn they risk repeating past mistakes reminiscent of the pre-2008 financial crisis era, potentially triggering another housing market crash due to increased high-risk lending. Reeves’ approach reflects desperation as economic growth remains minimal, job losses mount, and welfare cuts face political pushback; her reforms aim to encourage risk-taking in a sector long constrained by post-crisis regulations. However, financial industry insiders and commentators express skepticism about whether the reforms will succeed in restoring investor confidence or economic expansion, with some viewing them as a gamble that could exacerbate financial instability. Reeves’ position remains uncertain amid speculation over future tax hikes and doubts about her ability to deliver sustained economic recovery.