IIt is its desire to ensure that the city of London remains attractive after Britain’s exit from the European Union, and it appears that the Treasury has forgotten one of the main lessons in the 2008 financial crisis: when the regulations are lenient, the risks accumulate. This month, I launched a consultation on whether the time has come Reducing rules The two alternative asset managers, including private stock boxes and hedge funds, governs the belief that doing so will enhance growth. There is little evidence to support this idea, and every reason for the belief that it may exacerbate the regular risks.
The proposal is compatible with Rachel Reeves’s belief that expanding the financial sector will provide economic prosperity. The consultant suggested that the post -crisis regulations be gone “Very far”. These regulations included the directive of the European Union targeting alternative investment funds. Before 2008, this money mostly operates in the dark. There was no way to systematically track the leverage they were using, nor the risks that might put it.
Under the rules of the European Union, money that manages 100 million euros or more in assets was compliance with strict reporting requirements and maintaining enough capital to accommodate losses. The treasury is now studying this 100 million euros to 5 billion pounds, which exempts many money from Full list European Union rules. It will fall on the financial behavior salad to determine the rules that must be applied. This is concerned.
Mrs. Reeves issued instructions to FCA to encourage finances “Risk”And the organizer has boasted about cutting the pieces “Red tape”. Both look like reckless recipes. Although the private stock market and hedge funds have been smaller than causing a crisis in 2008, since then The size doubled three times. Several private stock boxes started borrowing Shadow banksWhich are not subject to the same regulations or capital requirements such as regular banks. Others began to take even More debt Of usual. The Bank of England raised the alarm on this Risk practices In 2023, it was suggested that the prevailing banks be Unintentionally For industry. These are reasons for more censorship, not less.
If FCA reduces the rules, the fund managers will be Their way. They pressed the European Union in 2010, and the United Kingdom was one of the few countries Oppose. Then, as now, the government wanted to protect the city, believing that it is a goose that lay golden eggs. This hatred towards the financial organization was a provider of “Singapore on the Times” of the world promoted by Brexiters. The hedge fund and stock managers donated lavish to their cause. A Study the electoral committee data By the academics Théo Bourgeron and Marlène Benquet revealed that the fund managers donated about 7.4 million pounds for the vacation campaign, and only 1.25 million pounds.
The Treasury seems to believe that unless the city gets what it wants, Britain may Check the box managers To countries like Luxembourg. There are many reasons to be careful not to edit financing. The first is that it will hinder, rather than help, economic growth. Research indicates that once the sector exceeds a certain size, it begins to become a withdrawal process Growth and productivity. A study from the University of Sheffield found that the United Kingdom lost Almost three years of the average growth of GDP Between 1995 and 2015 thanks to its inflated financial sector. Reducing regulations may be useful for box managers. It is difficult to know who will benefit.
