City ‘returning to old ways’
By Alex Stevenson
A year after the collapse of Lehman Brothers, Britain’s bankers are showing worrying signs of returning to their past behaviour, it has been claimed.
The Institute for Public Policy Research thinktank’s latest report has warned the return of big bonuses is symptomatic of a failure to embrace the culture changes needed to avoid another economic collapse in the future.
How To Make Capitalism Better calls for a financial system which helps the entire economy, not just the City. The report calls for increased regulation on both international and domestic levels.
“Alarm bells should be ringing with the early signs of a ‘back to business’ attitude in the City (as illustrated by the return of big bonuses) and little evidence that policymakers are taking measures to ensure the next economic recovery is better balanced than the last one,” IPPR’s senior economist Tony Dolphin said.
“Unless policymakers take action to create the blueprint for a more stable and sustainable model of capitalism, and one that delivers better outcomes for all not just a small elite, there is a real danger of another economic crisis in the future.”
The report has a clear roadmap for Britain’s economy, which before the current recession was fuelled by debt and consumption.
It backs developing growth based on exports and investment at home to achieve this goal.
On the international front, the report says the US should step down from its world leadership role. China and India must be given a larger role in the International Monetary Fund, it presses.
Mr Dolphin added: “The success of tomorrow’s capitalism will depend on how successful policymakers are in meeting a series of challenges.
“These require greater coordination: between international governments; the government and private sector; the financial sector and the rest of the economy; and between all parts of society to secure more equitable outcomes and improved well-being for all, not just the lucky few.”