Chancellor should focus on allowing banks to fail

Imposing costly policies may drive banks away from the UK

Commenting ahead of today’s Mansion House speech, Prof Philip Booth, Editorial Director at the Institute of Economic Affairs, said:

“In revealing the government’s proposals on the regulation of the banking sector, it is important that George Osborne does not impose costly policies that will have no benefit. Already we are seeing the UK economy strangled by the lack of bank funding caused partly by additional regulation and it is important that this is not exacerbated.

“The ring-fencing of deposit-taking and other banking functions from each other is largely irrelevant and may drive banks away from the UK. It is important, though, that banks exist within a legal framework that ensure that insolvent institutions can be wound down without any costs to the taxpayer.”