Competition Isn’t The Answer To Everything

In falling-over-their-own feet attempts to appear pro-business Ministers like to announce Big Things. A shake-up here, a revolution there.

Sometimes businesses like these ideas, but more usually what they really want is less interference, less tinkering, no sudden unexpected movements.

Today the FT reports that banks are set to be released from ringfencing rules in a drive to “free competitive spirit”.

City minister Andrew Griffith MP wants to “make the UK a better place to be a bank”.

Well, the UK is hardly a bad place to be a bank, which is why we have so many of them. (Enough, certainly).

A certain breed of politician thinks that competition is the answer to all problems, despite glaring evidence otherwise, lately in the energy sector and, soon, in telecoms.

(There are about 100 so-called alternets, small rivals to BT. It is a matter of time only before the government/the actual BT has to bail them out).

The plan to relax ringfencing rules is particularly odd since almost no one even in banking is calling for this.

The rules to separate the investment banks from the high street came in after the financial crash. They are there for a good reason.

The notion that relaxing them makes banks more competitive only applies if you think the route to economic happiness starts with a night in a casino.

The FT today also has interviews with three prominent bankers – Charlie Nunn of Lloyds, CS Venkatakrishnan of Barclays and Tidjane Thiam, formerly of Credit Suisse.

None of them bring up ringfencing as a hindrance to business being done. What they want from the government is stability.

Griffith is a very successful businessman and obviously a clever bloke.

He’s wrong about this one. It’s a reverse ferret in waiting.