Friday 26th July: This week, in Politeia's new volume The Financial Sector and the UK Economy: The Danger of Over-Regulation, a number of the country’s most distinguished economists warned Ministers that the emphasis, volume and efficacy of regulation for the financial sector may not bring about the intended results. Indeed it may prove counter effective. This week the Business Secretary the Rt Hon Vince Cable MP criticised the Bank of England for holding back the recovery by imposing excessive financial burdens on the banks. Is he correct?
Here, Warwick Lightfoot, a former treasury economist, explains that Ministers and the Bank of England have still not fully grasped the current condition of the UK banking sector and need to look beyond capital requirements when seeking remedies.
Since the credit crunch in 2007 and the collapse of the banks in 2008 the emphasis of British policy makers has been on improving the framework of regulation and increasing the capital base of the banks to ensure that it cannot happen again.
Instead what was required was an intrusive assessment of bank asset and liabilities and a willingness to recognise that much of the UK banking system was insolvent. The Federal Reserve has been much more assertive and more willing to take toxic assets off bank balance sheets. As a result the US credit system that is beginning to function again.
Friday 12th July: Following news from Germany that its system of subsidies for renewable energy may hamper progress towards effective electricity storage, the question for the UK is: Should this country step up its nuclear energy programme? A group of energy specialists agreed at a recent Politeia discussion that nuclear power will play a vital role in the UK energy mix, but if this is to happen far more needs to be decided by policy makers, writes Neil O’Sullivan, Politeia’s Assistant Director.
Researchers in Germany are arguing that innovative technologies used to store electricity could be hampered by the country’s system of feed-in tariffs for renewable energy. Finding a way to store intermittent renewable energy is vital if Germany is to replace its nuclear generational capacity now being phased out following Fukushima, with renewable alternatives proposed. But German scientists argue that the subsidy makes the electricity produced too expensive and therefore uneconomical for storage using new technologies such as ‘Power to Gas’. Finding ways to store renewable electricity is important if a consistent supply is to be maintained during periods when less energy is being generated.
Friday 5th July: As the bill calling for an EU Referendum passes its second reading in the House of Commons, Dr Sheila Lawlor, Politeia's Director, says the debate demonstrates the extent to which politicians at Westminster have lost touch with the public on Europe.
The bill for an EU referendum in 2017 has now passed its second reading in the Commons but the way in which it was passed suggests that our political elite is out of touch when it comes to Britain and the EU: out of touch with the people, out of touch with the country's economic needs and out of touch with the constitutional vandalism that the European Union has wreaked on English democracy. The bill itself is the result of chance, its sponsor won the MPs’ ‘lottery’ to bring a ‘private member’s’ bill; only a handful of Labour and Liberal Democrat MPs were present having been told to stay away from what Nick Clegg described as a political ‘stunt’.
Friday 28th June: At the G8 Summit, western leaders were divided over support for the Syrian rebels. Here Dr Robin Harris warns that arming the rebels would be a wrong move.
There is little political appetite in Britain for arming the Syrian rebels. Not that there is much doubt about the brutality of the Assad regime. But the rebels’ ranks are swollen by terrorist groups: arming them would do little to bring about the peace talks which G8 leaders want. Indeed such British intervention, would not just be wrong, but dangerous – for the unfortunate minorities, the region itself and the west.
Friday 21st June: A cautiously optimistic message from the Chancellor this week, says Dr Gerard Lyons, who was at the Mansion House to hear him.
The Chancellor's speech on Wednesday evening was, like that of the Governor of the Bank of England, positive. Its tone reflected the feeling in the room: relief and a strong dose of realism. Relief that both the economy and banking sector were recovering but realism that much still needed to be done. Overall there was not a great deal new in the speeches. We were reminded that further progress is being made to return to normal in the banking sector. There are plans for a good bank/bad bank for RBS. The government plans to sell out of its 39 per cent stake in Lloyds in stages. The Governor reminded us, meanwhile, that the biggest banks still have significant amounts of new capital to raise.