UK ring-fencing reform: why the ring-fence should be recalibrated, and how

Further, the regime presents costs to the UK economy, diverts investment away from the real economy and impairs the competitive position of UK banks in international markets. This position is clearly at odds with the present UK government’s objectives on growth, as acknowledged by the Chancellor, Rachel Reeves, in her Mansion House speech on July 15, 2025.

In our view, there is therefore a strong case to be made for change. This paper seeks to identify the downsides and residual benefits of ring-fencing in the current regulatory environment, examine what a recalibration could entail, and propose a revised regime which retains those residual benefits while reducing the costs of the regime to the real economy. We believe that the revisions would improve the competitiveness of the UK banking sector and flow of funding to the real economy.