Treasury offices, Westminster. Photo tanaka (CC BY 3.0).
Chancellor of the Exchequer Jeremy Hunt announced a package of financial sector reforms speaking in Edinburgh on 9 December.
Dubbed “Big Bang 2.0” after the notorious 1986 deregulation of the City of London, Hunt is undoing some of the regulation created after the financial crisis of 2007-2008.
Among other measures he wants to ease the separation between retail and investment banks, reduce the capital requirements backing insurance companies, and pave the way for a UK Central Bank Digital Currency.
The sector generally welcomed the announcement; hardly surprising as finance capital always wants less regulation. But not everyone was convinced. John Vickers, responsible for the post-2008 banking controls, said that making regulators also responsible for growth and competition was either “pointless or dangerous”.
The government’s line is that there is really no increased risk and it’s time to look again at regulation as it has learned the lessons of 2008! Hunt is presenting this as taking the opportunities of Brexit, a claim that looks thin when he goes on to list the supposed benefits. These reforms are all about freeing capital markets. That’s not going to help Britain and our industries.