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City of London

City of London, Photo: GJMarshy, Wikimedia Commons / cropped from original / licensed under CC BY-SA 4.0, linked at bottom of article

Terina Hine calls out the Tories’ plans for removing banking regulations, which were imposed due to the crisis of 2007-8, after over a decade of ballooning inequality.

The economic problems that refused to respect the imposed period of national mourning have now returned to the political stage. Britain’s economy is very sick: inflation is at 9.9%, the pound is in free fall, and interest rates are set to rise. The chancellor’s solution: huge tax cuts alongside financial deregulation, the most significant part of which is the unleashing of a free-for-all in the City of London.

Keen to make a mark before the annual party-conference season kicks in, the new government will present a ‘blizzard of announcements’: a business energy package on Wednesday, followed by an NHS announcement on Thursday, and finally, on Friday, Kwasi Kwarteng, the new chancellor, is expected to announce his mini-budget.

The caps on bankers’ bonuses, imposed following the banking crisis of 2007-8, are to be abolished and the City casino relaunched. The current cap limits bonuses to 100% of base salary, or 200% of base with the specific agreement of shareholders: hardly poverty wages. So, while the rest of us face the biggest cost-of-living crisis in decades, City bankers face a bonanza.

That the first act of the new government is to reward City bankers with millions in bonuses, while nurses and other key workers are expected to be grateful for pennies, speaks volumes.

Ideology has clearly won over optics. Levelling up, that flagship manifesto promise, is no longer even a slogan.

The imposition of regulation on the City was in part a reaction to the country’s unbalanced economy; reducing dependence on the City was supposed to spread the country’s wealth more evenly. We have well and truly returned to the era of trickle-down economics. If we are lucky, we may receive a chip or two, but if the previous era of City gambling is anything to go by, it is only the banks that will cash in.

Inequality reigns

And it is not as though they need it. While workers are striking for fair pay, and many businesses struggling, Britain’s banks made a whopping great profit. In the last year, according to Unite’s Sharon Graham, British banks made a profit of £45.6 billion.

So it was no surprise last week when the Financial Times reported that the British economy is marked by vast swathes of poverty sitting alongside small pockets of wealth. According to the analysis ‘the top-earning 3 per cent of UK households each took home about £84,000 after tax.’ This puts our top earners ‘comfortably among the global elite.’

Compare this to the lowest-earning group, whose standard of living is significantly below the poorest in similar countries, and 20% below their counterparts in Slovenia.

And now the middle-income groups are headed in a similar direction:

‘In 2007, the average UK household was 8 per cent worse off than its peers in north-western Europe, but the deficit has since ballooned to a record 20 per cent. On present trends, the average Slovenian household will be better off than its British counterpart by 2024, and the average Polish family will move ahead before the end of the decade. A country in desperate need of migrant labour may soon have to ask new arrivals to take a pay cut’, (John Burn-Murdoch, FT).

The last time the City of London embraced deregulation, we saw reckless gambling that led to the country’s biggest banks almost running out of money. The 2007-8 banking crisis crippled the country and led to years of austerity; we are still paying the price, the banks still cashing in those chips.

The governor of the Bank of England famously called for workers to refrain from demanding pay rises in these difficult economic times, but it appears restraint is only for those working outside the City. Within the square mile, greed has no boundaries, embracing an inflationary spiral all of its own.

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