27 February 2010
Letter to the Guardian
Despite the mistakes, we need bankers
The letter (26 February) from a group of academics, politicians
and union leaders made the point that the short-term interests of
the finance sector must never be allowed to come before the needs
of the wider UK economy and society as a whole. I could not agree
more.
The entire financial services industry recognises that major
mistakes have been made, there are serious lessons to be learnt and
substantial changes need to be implemented.
It has also been widely accepted that a new regulatory structure
is necessary and that UK taxes on businesses and higher earners
will have to rise if we are to tackle the huge public deficit we
are facing. However, the implications of these policies must first
be carefully considered against a global backdrop.
Financial services already makes a huge contribution to the
wider UK economy and society: not only does it provide 12% of this
country’s total tax take, but it also employs more than one million
people, attracts billions of pounds of investment from overseas and
provides a wide range of necessary products for which most of us
have some need during our lifetimes, as well as supplying the
capital for new entrepreneurs and businesses across the economy to
develop and grow.
These benefits could easily be diminished if we unilaterally
pursue the policies suggested, instead of building a consensus
amongst our international competitors, many of whom are facing
similar issues, especially in the US and the EU.
We simply cannot afford to place our international
competitiveness in jeopardy by implementing tax and regulatory
proposals that risk driving top City firms and hence the provision
of the financial services and products we need, to more welcoming
business environments overseas. This will only damage the UK
economy by making the raising of capital for new businesses more
difficult as well as raising its price and by reducing our tax
revenues and employment prospects.
So, whilst it is in all of our interests to make sure our
financial services industry benefits the wider UK economy and
society and that it makes the necessary change to its business
practices – with the agreement of firms, governments and regulators
across the world - it is also in our collective interest to ensure
we do not act in haste. Otherwise we could spend an awful lot of
time repenting these actions at our leisure.
Stuart Fraser
Chairman, Policy and Resources Committee, The City of London
Corporation