A GROUP of economists issued an open letter yesterday warning that Tory Chancellor Rishi Sunak’s planned financial deregulation bill will lead to an economic crisis which will dwarf the crash of 2008.
The letter, signed by 58 economists including former Tory-LibDem Coalition minister Vince Cable and former Greek finance minister Yanis Varoufakis, was sent to Sunak in reaction to the Queen’s Speech, which outlined plans to ‘cut red tape’ through a financial services and markets bill.
It warned that ‘competitiveness is an inappropriate objective for regulators’ and a ‘recipe for excessive risk-taking’ which could create ‘the same conditions that have since been blamed for the 2008 banking crash’.
The letter went on: ‘After the last global financial crisis, which cost the world economy some $10 trillion, it was accepted that a focus on competitiveness by the then Financial Services Authority (FSA) had helped cause the disaster.’
The letter also pointed to a 2019 speech by Andrew Bailey – the Bank of England governor when he headed the FSA’s successor, the Financial Conduct Authority – in which he argued against reintroducing a competition objective for the City watchdog. ‘It didn’t end well for anyone, including the FSA,’ Bailey said.
Cable said in a statement: ‘It is extraordinary that the lessons of the financial crisis are being forgotten already, despite the massive harm that was done. The new emphasis on “competitiveness” rather than stability and safety is an ominous warning that those who forget their history are doomed to repeat it.’
The Treasury has not yet confirmed the main policies that will make up its financial services and markets bill, which is expected to be put to Parliament in the coming months, but it is expected to involve a watering-down of regulation.
Meanwhile, Home Office Minister Rachel MacLean caused fury yesterday when she told struggling workers that they should deal with the cost of living crisis ‘by taking on more hours or moving to a better-paid job’.
MacLean, who became Tory MP for Redditch, Worcestershire in 2017 and jointly runs a business with her husband which posts profits of more than £1m a year, made the remarks on Sky TV yesterday morning.
TUC General Secretary Frances O’Grady responded: ‘It’s a bit rich for ministers to tell people to find better-paid work – especially when they have presided over an explosion of low-paid and insecure jobs.’
Labour Shadow Treasury Minister Tulip Siddiq said ‘so insulting’, adding: ‘No wonder people think politicians are out of touch.’
MacLean’s advice follows Tory MP Lee Anderson’s last week, when he claimed people who use food banks ‘cannot cook properly’ and ‘cannot budget’, adding that they should be able to feed themselves on 30p a day.
• The Labour Party is to demand a vote on the bringing in of a windfall tax on the profits of oil and gas producers today.