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Fortunes and fiscal failings
PRIME Minister Gordon Brown's promise to regulate what he calls "irresponsible behaviour" in the City will be greeted with incredulity by the thousands of HBOS workers in Yorkshire left fearing for their future after its merger with Lloyds TSB.
This is the man who spent a decade enjoying the fiscal benefits of a booming financial services industry and created the current regulatory system which failed to prevent the Northern Rock crisis
last year.
Its credibility was so undermined by that episode that when the Financial Services Authority gave HBOS a clean bill of health on Wednesday it was not enough to convince worried traders leaving a takeover as the only credible option.
The Prime Minister and his Chancellor, Alistair Darling, yesterday sought to take credit for restoring stability to the banking sector but offered no apology for the regulatory failings which have contributed to the current crisis.
Nevertheless, the events of recent days have made an eloquent case for some City practices to face more stringent checks and balances. The challenge for the Government is to ensure that the measures it introduces do not undermine the Square Mile's reputation as a global financial centre.
Mr Brown is a man desperate to please his party and the country and in those circumstances he may be tempted to use the events of recent days as a pretext for radical action. What is required, however, is considered proposals that are carefully targeted.
Above all, the Government must offer clarity and consistency about the business environment it wishes to create. Businesses have already moved their headquarters overseas because of uncertainty over the tax regime in Britain. Confusion over regulation in the City could have far more damaging consequences.
The dramatic events of recent days that have seen once grand financial institutions taken over and go under have created an appetite for change.
It is the job of the Prime Minister to resist the temptation to please the baying mob and instead construct the reasonable and responsible regulatory regime he should have done as Chancellor.
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Weather for Yorkshire
Sunday 12 February 2012
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