Brown admits ‘I was wrong on regulation’

Gordon Brown has admitted he made a “big mistake” on financial regulation before the banking crisis that plunged Britain into recession.

The former Prime Minister said the regulatory framework he put in place as Chancellor failed to address the “entanglements” of different institutions and “how global things were”.

Speaking at a conference in the United States, Mr Brown said he accepted his responsibility for the mistakes, but added that he was not alone in making them.

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At an event organised by the Institute for New Economic Thinking in Bretton Woods, New Hampshire, Mr Brown said that in the 1990s and the years up to 2007, when he was Chancellor, he was under “relentless pressure” from the City not to over-regulate.

The economic problem had been seen in terms of inflation rather than financial stability, he said. “So we created a monitoring system which was looking at individual institutions. That was the big mistake.

“We didn’t understand how risk was spread across the system, we didn’t understand the entanglements of different institutions with the other and we didn’t understand even though we talked about it just how global things were, including a shadow banking system as well as a banking system.”

Mr Brown said people had been made to rethink regulation “in its entirety” since the financial crisis.