Osborne stands up for capitalism

So, whither Tory economic policy? It was George Osborne’s turn to discuss it today, and, overall, it’s very good news. The shadow chancellor’s speech appears to be a rejection of Brownite rules-based economics. Inflation targeting was not enough to prevent the crash, and Osborne appears to say he’d empower the Bank of England governor to take a free view to regulating the City. But, as with a lot of Tory speeches at the moment, the desire to devolve power clashes with the desire to tinker. So Osborne proposes greater freedom of regulatory powers, but he’d like the banks to be smaller. Anyway, his full speech is here. My ten-point take below:

1) SMALL BANKS The headline proposal is Osborne saying he wants small banks. I’m sceptical: Canada had large banks. They worked very well because they were properly regulated. Size doesn’t matter, it’s what you do with them that counts. But I think we can safely disregard this: would Osborne impose a maximum balance sheet? Maximum market share? I suspect this is little more than a formula for disposing of the nationalised banks in a normal pre-amalgamation way.