Explain Labour's Response To The Economic Crisis
The Labour government’s response to the economic crisis of 2008 was reckless and irresponsible. Discuss.
The 1998 Comprehensive Spending Review boosted NHS spending by £21 billion 1999-2002 and Education by £19 billion despite a 1% cut in income tax announced in November 1997. Hague and Portillo described this as ‘‘reckless and irresponsible’‘ words that haunted them in the 2001 election. However in the aftermath of the most severe recession that many can remember, these same criticisms re-emerge, only with a little more verbosity.
The economy of the United Kingdom had been hit by rising oil prices and the credit crisis. Sir Win Bischoff, chairman of Citigroup, said he believed that house prices in Britain would keep falling for another …show more content…
The reforms were mainly implemented through The Financial Services Authority (FSA), a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. The FSA has been held by some observers to be weak and inactive in allowing irresponsible banking to precipitate the credit crunch which commenced in 2007. On 18 September 2008, the FSA announced a ban on short selling to reduce volatility in difficult markets lasting until 16 January 2009. Furthermore, Labour announced a ‘super tax’ on banker’s bonuses, however the amount of revenue this will proportionately raise in insignificant and it was introduced as an electoral imperative. However, most of the industry changing reforms were implemented a while after the recession, not in its immediate occurrence. Additionally, the FSA's implementation of capital requirements for banks has been lax relative to some other countries. In March 2009, Lord Turner published a regulatory review of the global financial crisis. The review broadly acknowledges that 'light touch' regulation has failed. Rather worryingly, there were no further promises to improve consumer protection or to directly intervene against financial institutions that treat their customers badly. The review was reportedly met with widespread relief in the city of London where firms had feared a 'revolution' in the way that they would be
The 1998 Comprehensive Spending Review boosted NHS spending by £21 billion 1999-2002 and Education by £19 billion despite a 1% cut in income tax announced in November 1997. Hague and Portillo described this as ‘‘reckless and irresponsible’‘ words that haunted them in the 2001 election. However in the aftermath of the most severe recession that many can remember, these same criticisms re-emerge, only with a little more verbosity.
The economy of the United Kingdom had been hit by rising oil prices and the credit crisis. Sir Win Bischoff, chairman of Citigroup, said he believed that house prices in Britain would keep falling for another …show more content…
The reforms were mainly implemented through The Financial Services Authority (FSA), a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. The FSA has been held by some observers to be weak and inactive in allowing irresponsible banking to precipitate the credit crunch which commenced in 2007. On 18 September 2008, the FSA announced a ban on short selling to reduce volatility in difficult markets lasting until 16 January 2009. Furthermore, Labour announced a ‘super tax’ on banker’s bonuses, however the amount of revenue this will proportionately raise in insignificant and it was introduced as an electoral imperative. However, most of the industry changing reforms were implemented a while after the recession, not in its immediate occurrence. Additionally, the FSA's implementation of capital requirements for banks has been lax relative to some other countries. In March 2009, Lord Turner published a regulatory review of the global financial crisis. The review broadly acknowledges that 'light touch' regulation has failed. Rather worryingly, there were no further promises to improve consumer protection or to directly intervene against financial institutions that treat their customers badly. The review was reportedly met with widespread relief in the city of London where firms had feared a 'revolution' in the way that they would be