February 8, 2013
Mark appeared on Friday’s Daily Politics to discuss banking reform. You can view that appearance at around 9 minutes in on BBC iPlayer. Mark’s notes on the issues being discussed can be read below.
– I have always been sceptical about the practicability of a ringfence; if it is such a great idea, why is it not being followed elsewhere? The Volcker/Liikanen variants are also creating a recipe for uncertainty.
– The ringfence is George Osborne’s ‘baby’. But in accepting the draconian sanction of possible break-up, his pragmatic move adds a further unwelcome layer of uncertainty/insecurity to this critical sector of the UK economy.
– Superficially attractive and populist to clampdown on RBS bonus pool as punishment for LIBOR misdemeanours. However it risks undermining further the value of taxpayers’ stake in the bank.
– Truth is we need banks more than ever; beset by 20/20 hindsight which characterises virtually every novel marketed product of past decade as ‘missold’. Real impediment to proper functioning of banks; i.e. lending to real economy.
– Real risk that so much hope and expectation is being placed in his arrival in July as saviour of UK economy.
– Predictably headlines of Treasury Select Committee hearing surrounds his bumper salary package…expect this vein to continue.
– Suspect he will in key areas reflect more of a continuation of policy than currently expected. Signalled he will pursue ultra low interest rates (this attracted him to the Chancellor, I suspect) and willingness to print more money as main tool of stimulus (QE will not rapidly be consigned to history, more’s the pity).
– Ultimately the challenge that Mr Carney faces will not be about growth (which will probably return in 2014/15) but diminished living standards.