One reason to worry about the chancellor’s plan for deregulation in the financial services sector is the dramatic language in which she pitched it. Rachel Reeves’s metaphor in her Mansion House speech last month about regulation in too many areas acting as “a boot on the neck of business” felt wildly over the top when you remember why tougher financial rules were needed in the banking sector in the first place. It was because the light-touch regulatory era caused the whole economy to be clobbered in the collapses of 2008-09.
In the event, it took until 2019 to implement fully the centrepiece of the clean-up operation: bank ringfencing, which requires UK banks of a certain size to separate their retail and investment banking activities. Now, six years later – no time at all in the grand scheme – the Treasury, lobbied by most of the big banks, is contemplating “meaningful” changes to ringfencing in the interests of economic growth. It feels far too soon to try anything radical.
