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Table of Contents
INTRODUCTIONThe UK deregulation of the 1970s and 1980s freed the way for banks to benefit and take advantage of new prospects through globalisation and financial improvement. Unchained from regulatory restrictions, banks began to branch out into new activities, using current expertise and infrastructure to cross-sell new products. Until the Big Bang of 1986 it was prohibited for foreign firms, to become members of the London Stock Exchange. The deregulation also led the way for venture banking operations on the American model to start working in London. It also replaced open uproar trading on the floor of the exchange with electronic trading.
The Big Bang itself, on October 27, 1986, corresponded with the coming of screen trading, but was essentially about deregulating the Stock Exchange. Above all, it enabled 100 per cent outside ownership of member firms – a move enforced by the Thatcher government on a largely enthusiastic City, so that London could operate on a modern, properly capitalised basis as an international financial centre. By the 1980, preferential regulation of mutual was removed and the bank deregulation meant that restrictions on investment portfolios no longer existed. This also resulted in banks and building societies competing with each other on the whole range of financial services. The effect of the deregulation of the UK Building Societies Act of 1986 opened a way for competitions between building societies and commercial banks, also introducing a procedure for the demutualisation of building societies. This in turn resulted in a number of mergers and takeovers and enabled the long established banks to benefit from the specialist products, services, and customer base of the former building societies. Demutualised insurance companies were also bought by these larger banks but still trade under their own name.
Deregulation of the market, known as “Big Bang”:
Ownership of member firms by an outside corporation is allowed. All firms become broker/dealers able to operate in a dual capacity. Minimum scales of commission are abolished.
Individual members cease to have voting rights.
Trading moves from being conducted face-to-face on a market floor to being performed via computer and telephone from separate dealing rooms. The Exchange becomes a private limited company under the Companies Act 1985. Over the past decade, economic growth in the UK has been driven by the accumulation of unsustainable levels of private sector debt and rising public sector debt. This pattern of unbalanced growth and excessive debt has helped create the exceptional economic and fiscal challenges that the Government must address, to restore the economy to sustainable, balanced and private sector-led growth.
The UK’s over reliance all started when Banks first opened up during the 1800's when Goldsmiths started opening up banks. The UK is now in a predominantly service industry and due to the current recession the country is suffering because very little is produced. The government is also very reluctant on setting up any new industries in order to provide employment to the millions of unemployed citizens since the country went into recession in 2008 and the future isn’t looking too bright for the economy either.
The economy of the North of the UK was previously based on manufacturing. These areas thrived during the industrial revolution until the 1970s. When there was a shift in the emphasis of government from manufacturing to services, many of these manufacturing communities started to die out as manufacturing started to move abroad leading to these areas became poor. However as the service industry which includes banking and financial services grew, London and the South increased in influence, employment flourished and the gap between the North & South widened. Although...