Leading economists have warned the government that plans to cut City regulation could risk another financial crash.

The Guardian newspaper reported that 58 economists, including former Liberal Democrat business minister Vince Cable, have signed an open letter to chancellor Rishi Sunak in response to measures proposed in the Financial Services and Markets Bill.

The proposals announced in last week’s Queen’s speech are designed to replace EU regulations with UK-derived regulation for financial services following Brexit with the goal of maintaining the City’s status as a global financial hub by “cutting red tape”.

The government says that one of the main benefits of the legislation will be “harnessing the opportunities of innovative technologies” like cryptocurrencies.

The government also said the law would also update the objectives of the financial services regulators to “ensure a greater focus on growth and international competitiveness” and reform the rules that regulate the UK’s capital markets to promote investment.

Responding to the measures, the open letter, as reported by the Guardian newspaper, states: “We wholeheartedly support the government’s aim to stimulate long-term UK economic growth, including through financial regulation.”

“Yet we believe that competitiveness is an inappropriate objective for regulators.”

The group of economists warned that including competitiveness in the role of regulatory authorities could be a “recipe for excessive risk-taking” of the kind that led to the sub-prime mortgage crisis and subsequent financial crash in 2008 which, the economists estimated cost the world economy “some $10 trillion”.

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