Banking

Ever since the Elizabethan poor laws — if not before — society has tended to divide the poor into the deserving and the undeserving. But, as I write in this week’s magazine, our politicians are now taking aim at a new category, the undeserving rich. Who you consider to be the undeserving rich depends on your ideological leanings. Russian oligarchs or the families of Middle Eastern despots are, perhaps, the most obvious examples. They have acquired huge wealth but often by illegitimate means. Then come those who evade, to use a favourite phrase of both David Cameron and Ed Miliband, “their responsibilities”. This includes those who dodge their taxes or

A sweeping and utterly typical performance from Vince Cable in his interview with the Times (£) today. Not only does he plunge his teeth into the exposed flesh of the bankers (criticising them for their “special pleading” over banking reforms), but he also offers another overarching diagnosis of the British economy (there won’t be a repeat of 2008’s financial crisis, he says, in case you were wondering, but slow growth could be a problem). I feel like a spoilsport for pointing out that, only four months ago, the Business Secretary was actually warning that “you can see” another financial crash happening. But aside from Cable’s fiery rhetoric, it’s worth noting

The headline measure in the Vickers Review—the need for a ring fence between retail and investment banking—should not harm the City’s global competitiveness as it only applies to banks with a UK retail operation. For everyone else, Vickers would leave London as a relatively good place to do business: far more certain than Hong Kong and less restrictive than New York once the new Dodd-Frank regulations are in place. In Conservatives circles tonight, there is a quiet confidence that the government will be able to accept the Vickers Review in full when it reports in the autumn. Given that the bill to scrap the disastrous tripartite regulatory system is currently

The recession has made Britain’s banks less competitive and they should be broken up, concludes the Treasury Select Committee. As the banking system spiralled towards oblivion in 2008, the market became more concentrated. ‘The financial crisis has resulted in significant consolidation of the UK retail market. Well known firms such as HBOS, Alliance & Leicester and Bradford and Bingley have either exited the market or merged with rival firms. A large number of building societies have merged, undermining the diversity of provision in the sector. Whilst these ‘rescues’ were necessary in order to preserve financial stability, the consequence has been to reduce competition and choice in the market.’ Each merger

To be sure, there was some good stuff in the budget, and I probably feel more positive about it than I expected to. The additional 1 percent cut in corporation tax, above and beyond what had already been announced, was perhaps the high point, although it will be the 1p cut in fuel duty (replacing a planned 5p rise) that draws the most favourable headlines. The rise in the personal allowance, meanwhile, is something the Adam Smith Institute has advocated for a (very) long time. Still, there were, as always, downsides. The goal to make UK corporation tax the most competitive in the G7 is a laudable one, and the

No wonder the banks like Britain’s corporation tax regime. This morning’s newspapers all tell that Barclays paid just £113m in corporation tax in 2009, despite making profits of more than £11bn. In a rare instance of justified anger, Labour’s chosen men have launched an attack on the government’s failure to ‘take the robust action needed to make sure that the banks which caused the crash pay their fair share, and will stick in the stomachs of small businesses struggling to borrow and ordinary people feeling the pinch of the government’s austerity measures.’ Whatever the absurdities of Labour’s position, this news will ‘stick in the stomachs’ of the little people, whose

In today’s Wikileaks revelations, it is Mervyn King’s turn to be pushed through the mill. Did he act politically when pushing for a deficit reduction plan? Was he critical of David Cameron and George Osborne or just pointing out the obvious: that the Tory leaders had not held power before and – shock horror – were keen to get elected? The Guardian’s reading of the cables suggests that the government’s Batman and Robin (to keep with US diplomatic style) were unprepared for the task ahead. But re-read the key passages and it is clear that Cameron and Osborne were no different from any other opposition leaders – reliant on a

I’m finishing a two-day trip to Spain and am about to board a plane, just as the bond markets turn their attention to the Iberian Peninsula. As James wrote yesterday, the gap between Spanish 10-year government bonds and those of Germany has widened to as much as 2.59 percentage points – the biggest gap since the introduction of the euro. For its part, the Portuguese government said it was under no pressure from the European Central Bank or other Eurozone member-states to accept financial aid to ease its debt and deficit problems. That sounds like the noise before the defeat. Portugal was brought to a halt yesterday by a strike