The UK economy had the largest finance sector of any major economy, and was therefore the most exposed. Within a year, Brown was putting together an unprecedented package of bailouts, nationalisations and debt-write offs to stop the entire system from collapse.īrown’s hubris is an unheeded warning. Just before the global financial crash, newly-installed Prime Minister Gordon Brown, who as Chancellor had championed light-touch regulation, gave a speech to the City of London heralding the assembled financiers, saying this was “an era that history will record as the beginning of a new golden age for the City of London.” Regulators and politicians in the US and UK assured us this was an isolated incident – just one bad bank – and that there was no risk to the wider global banking system, no risk of contagion. In the wake of SVB’s collapse, the UK Chancellor Jeremy Hunt trumpeted that the UK arm of SVB had been transferred to HSBC without a penny being spent in taxpayer support. But the fact that shares are falling across the banking sector suggests there are fears problems may be more widespread. Logically if one bank fails, and it’s purely one bad apple, then the other banks should benefit – they can now grab a larger market share. The biggest falls have been in bank shares. These events have left markets jittery: the FTSE 100 is down by 10 per cent in the last month, with over £150 billion wiped from UK share values in just the last week. It could be a canary in the coalmine and warning of what is to come. The collapse of the tech-focused Silicon Valley Bank (SVB) in the US and the rescue of 167-year old banking institution Credit Suisse may feel far from home but they should concern us.
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