The chancellor has called the UK’s financial services sector “the crown jewel in our economy” and has claimed that regulations imposed after the global financial crisis have “gone too far”.

Reeves has tweaked the remit of the City regulator the Financial Conduct Authority (FCA) and has urged it to support the growth and competitiveness of the sector, alongside protecting consumers.

But responding to a call for evidence by the Treasury, 50 experts said deregulating the City would work against Labour’s wider aims.

They claimed that allowing the financial services sector to expand further risked “undermining the government’s efforts to grow the economy,” and also posed “particular risks to the government’s wider industrial strategy and missions”.

Signatories included the Nobel laureate Joseph Stiglitz, the Labour peer and anti-poverty campaigner Ruth Lister, the economist Sir John Kay and the former FFCA board member Mick McAteer.

They claimed that the City sucked talent and resources away from potentially more productive activities, and that the “vast majority” of lending went towards driving up the price of existing assets, such as property, instead of backing businesses.

“The wealth of empirical evidence showing that, beyond a certain threshold, financial sector growth harms the wider economy,” their statement said, adding: “History has shown time and time again that beyond a certain point, the financial sector can only continue to grow by taking excessive risks and increasing the economy’s debt burden until the inevitable collapse.”