In his autumn financial statement, Chancellor Hunt proposed easing the tax burden on banks, reviewing regulations that originated from out membership of the EU and announced that:
Rules surrounding the amount of money insurers must hold to cover potential losses - known as Solvency II - are to be eased, freeing up billions of pounds, ministers hope, for investing in badly needed infrastructure projects, including nuclear energy. [...] The reforms have resulted in disagreements between the Bank of England and the Treasury about the extent of financial safety cushions.
The Government appears to have dismissed the regulator's concerns, as the Chancellor said the changes would "unlock tens of billions of pounds of investment". [Report by David Connett in The Independent and i]
This is all very reminiscent of President Clinton's removal of banking and mortgage regulations in the 1990s. This led to a short-term economic boom, but also to the credit crash of 2008, as this Demos blog explains. Admittedly, various checks had already been eroded over the years, as the blogger points out, but it was the Clinton dash for growth that ensured that a financial crash would ensue. This occurred after Clinton left office, distancing him from the transatlantic carnage which followed. No doubt Sunak and Hunt have made a similar calculation: if a major insurer fails, it will be on the watch of their successors.
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