Tory leader David Cameron used a speech to the City of London this morning as his opportunity to stop being nice to Labour, launching a stinging attack on Gordon Brown’s handling of the economy. He criticised the PM for ‘irresponsible government’ and ‘false assumptions’, and accused him of a ‘complete and utter failure’ of policy. He also called for regulators to have greater power to keep the banks in line – and judging by FSA boss Lord Turner’s comments today, he’s preaching to the converted...
In an interview with the Guardian, Lord Turner said the FSA would be taking a much harder line in the future. ‘There is no doubt the touch will be heavier,’ said Turner – in other words, he’s drawing a line under the old 'light-touch' regime, which basically involved the FSA keeping out of the way as much as possible (and was, to be fair, used as a template by regulators around the world).
Turner suggested that in recent years, the FSA has not had enough clout to stand up to the big banks, or to their demands for less red tape – but the political wind has well and truly changed: ‘Over-regulation and red tape has been used as a polemical bludgeon. We have probably been over-deferential to that rhetoric,’ he eloquently admitted. Now he plans to recruit a new generation of regulators, even if that means hiring lots of expensive ex-bankers. ‘Poachers turned gamekeepers are very attractive to hire,’ said Turner. ‘The FSA, in relation to systemically important firms, was trying to do regulation on the cheap.’
All of this chimes nicely with the rhetoric coming from the Tory camp – although David Cameron will be wary of aligning himself too closely with a Labour stalwart like Turner. Despite giving his backing to the Government’s recapitalisation plan – partly to look responsible and partly for want of any better ideas – Dave spent today’s speech desperately trying to put clear blue water between him and Gordon Brown on economic policy.
The PM, he argued today, has been guilty of ‘false assumptions’ – notably, the idea that you can build an economy on a ‘narrow base of housing, public spending and financial services’. According to Cameron, we need a broader base, involving ‘more science, more hi-tech services, more green technologies, more engineering and more high-value manufacturing.’ Music to the ears of these sectors, perhaps – but easier said than done.
Either way, it’s clear that business and the economy is going to be the major political battleground in the coming year...
In today's bulletin:
FTSE rallies - but are insurers next?
Regulator gets tough - and so does Dave
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MT's Little Ray of Sunshine: Google going great guns
How to cope with volatility, with YouTube