Chancellor Rachel Reeves is set to instruct financial regulators to help lower obstacles facing businesses trying to reduce their carbon emissions, as part of a wider strategy to stimulate green growth in the UK economy, a government source informed.
In a speech scheduled for Tuesday evening at the Mansion House — her first major address to the City of London as Chancellor — Reeves will announce a new initiative involving the Financial Conduct Authority, the Bank of England, and the Green Finance Institute. The three institutions will jointly run a Transition Finance Pilot to identify regulatory and structural hurdles that prevent high-emitting companies from cutting their emissions.
The pilot is intended to examine how climate-related projects are currently financed and to work with industry stakeholders to identify bottlenecks and propose reforms. It follows an independent review of transition finance commissioned by the former Conservative government and published in October, which pointed to a range of barriers. These included concerns over the financial risk of emerging decarbonisation technologies, policy uncertainty around long-term government support, and fears of reputational harm for firms investing in emission-reduction (rather than full elimination) strategies.
Reeves’ remarks, to be delivered alongside Bank of England Governor Andrew Bailey, are expected to reaffirm the Labour government’s ambition to position the UK as a leader in green finance. At last year’s Mansion House speech, she criticised regulators for not prioritising economic growth — a key pillar of the new administration’s economic agenda.
While the UK posted stronger-than-expected growth in the first quarter of 2025, momentum has since slowed, and economists warn that Reeves may need to raise tens of billions in taxes later this year to maintain fiscal stability. The government believes unlocking green finance could inject as much as £200 billion into the economy, helping to offset budgetary pressures and support long-term growth.
