City AM attack Osborne’s “short-sighted” banking policy

A City AM Editorial today defends British finance and business interests. It described George Osborne's policy as "short-sighted, ignorant of the empirical evidence"

City AM Editor, Allister Heath, was on fine form this morning in his Editor’s Letter as he put his interview with the “intelligent and decent” Alistair Darling into perspective. None of the parties were spared as he  defended British finance and business interests.

Mr Heath’s anger was primarily directed at the Lib Dems who he described as “the most left-wing party in British politics by a fair distance” with “a long list of destructive ideas based around the glorification of an outsized state”. He also turns his ire on the Labour party’s National Insurance rise and 50p tax rate.

But there was also a surprising rebuke for the Tories. Heath writes:

“Darling’s banking policy is less bad than that of the Tories, which is short-sighted, ignorant of the empirical evidence and more interested in tapping into popular hatred than building a more robust and successful industry.”

The Conservative manifesto includes a number of ideas which have been criticised including:

• offering a “people’s bank bonus”, which would privilege a few taxpayers at the expense of the many and which has been described by Nils Pratley in the Guardian as “utterly unfair“;

• introducing a unilateral levy on banks if international agreement cannot be agreed – an approach described by Lord Mayor of London, Nick Anstee, as “bonkers“;

• creating a National Loan Guarantee Scheme which Andrew Lilico, the Managing Director of Europe Economics, described on Conservative Home as a “terrible idea“; and

• breaking up the tripartite system which FSA chief executive, Hector Sants, described as inviting a “a fragmentation of approaches and a ‘turf war’ between the different bodies involved” and is opposed by FSA regulator Lord Adair Turner.

In the interview with City AM, the Chancellor said, “I don’t want to do anything that would make people think about going somewhere else. There is a substantial risk that if you do something unilaterally, they have that option.”

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One Response to “City AM attack Osborne’s “short-sighted” banking policy”

  1. El Sid

    “more interested in tapping into popular hatred”
    Hmm – not that LFF could ever be accused of doing that about the banks! It does highlight the problem, that populist nonsense about the banks will end up harming the country long-term, by discouraging decision-makers from the proper course. Which course is probably not what the populus want to hear…. So it’s vital that we have calm, rational debate on this vital bit of our economic future.

    So Sants doesn’t want the breakup of the FSA? Constipation Sherlock? Of course he doesn’t want his empire to be destroyed. OK, Turner has a point in that rearranging the day-to-day regulation shouldn’t be rushed when things are still pretty raw. It’s something to do in the course of a Parliament rather than in the 50-day Budget. But we need a roadmap to help people plan in an orderly fashion. And as much of the strategic stuff needs to be centralised at the BoE as soon as reasonably possible – just getting the Treasury out of the loop would be a big help.

    Oh and just for clarity for anyone else reading this – Lilico actually said of the NLG “I am inclined to think a national loan guarantee scheme a terrible idea – the next ratchet for State control…..the elegant solution here remains for the government…providing funds to everyone through tax cuts”. He’s not certain whether it is a terrible idea or not, he’s trying to think it through – and one of his two reasons is fear of the Daily Mail, so you can debate the merits of that.

    As for a unilateral levy on banks – the Tories one will be less than the bonus tax. Which was imposed unilaterally. I’d agree that in principle unilateral action is pretty dumb, I guess we’ll just have to see what happens in Seoul but it seems like unilateral action won’t be necessary.

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