Rachel Reeves was in full Iron Lady mode when she delivered her Mansion House speech to the City’s finest this week. Regulation was acting like “a boot on the neck” of business, choking off enterprise and innovation. Cutting red tape would have a “ripple effect” on the whole economy. Regulators should not give way to the temptation of “excessive caution” but instead boldly regulate for growth. It could have been any Tory chancellor since Nigel Lawson speaking.
If Reeves seriously believes this stuff she is heading for a rude awakening. Chancellors don’t need a crystal ball to tell them where financial deregulation leads; they can read the many books detailing what happened last time this was tried. The global financial crisis of 2008 came about because policymakers bowed to the pressure from big finance to sweep away “burdensome” regulations, pledging that more funds could be channelled into productive investment as a consequence.
