Let me say something unpopular. The UK should drop the anti banker rhetoric. The sport of banker bashing may have come in handy for unpopular politicians facing their own crisis of probity, but time has moved on. Banking is a most important part of the UK economy. London and the Uk benefits from acting as host to some the world’s largest banks. They generate jobs and incomes which circulate in the UK. Banks may contain poor directors and managers who make bad mistakes. They may pay some of their people too much – rather like football and parts of the media. They may not serve us as well as we wish – like the parts of government. Nonetheless we are better off with them, warts and all, than if they left.
Some of the banks criticis take the view that they will always be around, so why not have another free hit. I would not be so sure. Change is mighty rapid in today’s world. Industry has been hollowed out to the East very quickly in recent years.There are many global centres working away to dislodge some of London’s biggest and finest. As the weight of world trade , world wealth and world activity gravitates more to the East there will be a natural pull for banks to set up their headquarters there as well. London and the UK are engaged in a fight to keep or grow what we have.
It is true that there were excesses in Investment banking in recent years. These were made possible by monetary authorities pursuing very easy money policies, and by Regulators who seemed relaxed about the excess until late in the day. The Vickers Review needs to examine how cash and capital controls could be used counter cyclically, to prevent excess when markets are doing well, and to help stave off disaster when markets are doing badly.Success in creating better regulation, sensitive to the market cycle, would be good for the future of London.
Above all the Review should see that we still have something to be proud of in the City. You do not see Germany bashing motor manufacturing, its core activity, nor France complaining about the problems the drinks industry can create. The UK has done enough self flagellation.