Economists sound the alarm over UK’s post-Brexit finance plans -Breaking
LONDON, (Reuters) – More than 50 economists have warned Monday that Britain’s post Brexit plans to increase the competition in its vast finance sector could lead to similar problems as the one that caused the financial crisis.
In order to make use of its Brexit freedoms, the government announced that regulators would be required to ensure the City of London continues to function as a financial center worldwide after it leaves the European Union.
The group, which included 58 economists and a former minister of business, Vince Cable, stated that having competitiveness as an objective for regulators could make them cheerleaders to banks and cause poor policymaking.
They also warned that the financial sector could be a problem for the real economy, as it takes in too many talent.
The letter stated that the UK needs to have clear regulations in place. These should promote productivity and growth across the economy, as well as protect taxpayers and consumers. They also need to combat climate change, tackle dirty money, and protect the collective security of the country.
John Glen (Britain’s Financial Services Minister) stated that the Bank of England’s competitiveness goal and the Financial Conduct Authority’s new objective are secondary to protecting markets, consumers, and companies.
The banks have tried to focus more on competition than was proposed. However, the BoE has resisted the government’s request for a return of the “light touch” era which saw lenders being saved during the financial crisis.
Cable, who was once the leader of the centre-right Liberal Democrats, Mick McAteer (an ex-board member of FCA) and Joseph Stiglitz, an economist with the Nobel Prize, were the signators of the open letters.