Rachel Reeves’s enthusiasm for the City of London – the “crown jewel in our economy” – raises concerns. Economists were worried enough to publicly warn her this month that liberalising financial sector regulations could undermine the government’s efforts to grow the economy, posing “particular risks to the government’s wider industrial strategy”. They also stressed the importance of not forgetting the painful lessons of the 2008 global financial crisis.
The experts were responding to the chancellor’s November Mansion House speech, in which Ms Reeves suggested that post-crisis regulations have “gone too far”. This is a troubling statement. Those rules were implemented to curb the sector’s excesses, prevent systemic risks and ensure that the Treasury does not have to bail out its failures. Rolling back such measures in the name of economic growth ignores the stability and protection they’ve provided.
