Last week, the UK government used the Queen’s Speech to announce a Financial Services and Markets Bill which will contain two new objectives for the country’s financial regulators: to promote ‘growth’ and ‘international competitiveness’. .
According to the government, this is part of wider plans to ensure that financial services continue to be provided to individuals and businesses. But what “international competitiveness” really means is letting multinational financial corporations make huge profits by taking irresponsible risks with taxpayers’ money.
At a time of global financial volatility, severe climate risk and cost of living crisis, we should be very concerned about the signals these plans send about the government’s policy priorities – and the ability of these new targets to deliver benefits to the real economy.
That’s why I’ve joined more than 50 leading economists, including Nobel laureates and former ministers and regulators, in sending an open letter to the government opposing these misguided proposals.
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And we have good reason to be concerned – after all, we’ve been here before. In the years leading up to the global financial crisis of 2008, the cataclysmic event that cost the global economy some $10 billion, the Financial Services Authority (now replaced by the Financial Conduct Authority) focused on competitiveness, which, following the crisis, contributed to causing the disaster.
As Andrew Bailey, now Governor of the Bank of England, reminded us in 2019, Britain once attempted a competitiveness goal, and “it didn’t end well, for anyone.” The government should heed his warning, to prevent UK taxpayers from bailing out the sector again when excessive risk-taking explodes into another crisis.