George Osborne sets out to protect UK investment market
George Osborne will be making his way to Brussels on Tuesday where he will look to fight the corner of the UK investment market. In particular he will be looking him to block the introduction of new legislation with regards to hedge funds and similar investment vehicles. The vast majority of European hedge fund vehicles are situated in the UK and any change to the regulations would impact significantly on the UK marketplace.
There has been concern regarding potential new regulations for the hedge fund industry for some time now with many believing an increase in regulatory costs would reduce returns and future investment. While there is no doubt that the hedge fund industry, and similar investment vehicles, more than played their part in the recent economic turmoil the problem is that we operate in a free market. If investments are sold down to unsustainable levels then eventually buyers will return and conversely if investments are pushed too far ahead then ultimately sellers will appear - assuming all is well.
While this is possibly an oversimplification of the situation, bearing in mind the power and finances behind these large hedge funds, it is difficult to operate in a free market climate while looking to restrict and reduce investment opportunities. Again, finding a balance between retaining an orderly market and allowing innovation in the future may well take some time to sort out.
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