Bank of England’s Over‑Regulation Could Be Holding the UK Economy Back
Yerbol Orynbayev, a veteran financial‑services consultant who once served as the Deputy Prime Minister of Kazakhstan and a World Bank governor, argues that if Britain wants a real bounce‑back this year, the Bank of England needs to stop tightening its grip on fintech firms.
Revolut’s Three‑Year Wait Illustrates the Problem
- A UK banking licence is usually granted within 12 months, but Revolut’s application has stalled for nearly three, thanks to the Bank’s Prudential Regulatory Authority.
- Revolut is a pioneer in foreign‑exchange services; a licence would let it broaden its offerings and boost competition.
- The delay has stifled innovation and prevented Revolut from meeting customers’ evolving needs.
The Economy’s Sluggish Pulse
After a 0.3% GDP contraction in Q4 2023, the UK slipped into a technical recession. Orynbayev points out that excessive caution from the Bank of England—paired with the FCA—has been a major blocker.
Why the Bank of England’s New Tightening Might Backfire
- Non‑bank financial institutions (NBFIs) manage over 46% of global assets (about $218 trillion) and have been key to the UK’s rise in business lending.
- The Bank’s attempt to shore up NBFIs was sparked by 2022 tax cuts under Liz Truss, which triggered a surge in bond buying and higher yields—hinting at underlying fragility.
- Orynbayev warns that “reactive punishments” could stifle the wider financial landscape, especially as the sector is increasingly driven by fintech challengers like Monzo and Starling.
Interest Rates: A Delayed Catalyst?
Chief economist Huw Pill has said that an interest‑rate cut remains “some way off.” Orynbayev’s take: the Bank of England’s hesitation not only dampens financial innovation but also hampers wider economic growth. The focus on cautious tightening is keeping the “business activity” from re‑igniting.
What’s Next?
Orynbayev believes the Bank of England has a real chance to shape the future of the UK’s fintech ecosystem—and the post‑recession recovery. The key is to move away from a risk‑averse stance and embrace the uncertainties that come with innovation.
Ready for the next wave? Keep an eye on how the regulatory environment evolves.
