Comment: Banker-bashing won’t help the recovery
Bashing the banks might play well to the gallery, but we’ll need the City to drive Britain to recovery.
By Mark Field MP
Amidst feverish analysis of the size, scope and impact of the government’s chosen spending cuts, a fresh debate is emerging about the desirable blueprint for Britain’s economic future.
Such is the near universal distaste reserved for financial services that a determination no longer to rely on its economic contribution seems one of the only certainties in these discussions.
As a result, ‘rebalancing” is the new economic watchword. For sure, the financial crisis painfully highlighted the UK’s dependence on the City and our collective exposure to the risks taken by the global banking fraternity.
My worry, however, is that it is being used as code – even by Conservative coalition ministers – for a playing to the gallery as part of the general banker bashing sentiment.
It is superficially convincing to promote trying to stimulate growth more evenly throughout the regions and stepping up our game in the innovation and incubation of companies in the high-value-added areas of high-tech manufacturing, engineering, pharmaceuticals and biotechnology. But we must be wary of how the aim of rebalancing is pursued.
Unwisely, most of the focus so far has been on how we might shrink the City to reduce its relative importance rather than how to provide the positive economic climate in which other sectors flourish. Before we pursue such a dangerous strategy any further, I wish to make the case for why financial services must remain a central plank in Britain’s bid for continuing relevance in the global economy.
A strong financial services sector is overwhelmingly beneficial to our nation – it provides the critical mass to draw business to this country; offers diversified sources of capital to our small businesses; makes huge contributions to the Treasury’s coffers in terms of tax and employment; and supports a wide range of complementary industries from law to leisure.
It is also one of the few areas where we might envisage significant growth in the decades to come. Tens of millions who join the ranks of the global middle class annually from India and China have a greater cultural propensity to save and will seek expertise in investing their savings. Indeed it seems evident to me that the entire drive for the West is directed towards capturing the growth of the developing markets.
Here in the UK we have already secured such a competitive advantage – in financial services. Why now throw it all away? Aside from this, there are several reasons to believe that the task of rebalancing might prove trickier than we might wish.
It is time that we changed our attitude towards the City from one of punishment to one of realism. How we treat our nation’s most valuable economic resource in the years ahead will be the litmus test for international businesses when it comes to determining how serious Britain is in its wish to be a dynamic, open economy which embraces global talent, promotes aspiration and welcomes business.
Mark Field is the Conservative Member of Parliament for the Cities of London and Westminster.
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