Here we go again. The Government is dusting off the well-worn manual titled How to Ignore Regulators and Repeat the Mistakes of the Past. In an almost comical twist of fate, it’s starting to feel like the pre-2008 financial bubble—the boom before the inevitable bust—but this time, the cycle seems turbocharged by a government eager to dismantle the very guardrails designed to keep us from careening off the economic cliff.
Driving Growth… Straight into a Wall?
Chancellor Rachel Reeves is summoning regulators like a headteacher calling in wayward students, demanding they report to No. 11 with bright ideas on how to grease the wheels of industry. Innovation and investment, she says, are the way forward. Growth at all costs, she insists. But isn’t this the same mantra that led us to financial carnage in the first place?
One might wonder if Reeves skipped the part of economic history that details how reckless deregulation fuelled the global financial crisis. Or perhaps she remembers it all too well and has simply decided it’s worth the risk for the sake of some short-term political wins. Either way, this strategy feels more like a high-stakes gamble than a considered plan.
The Regulators: Pawns in a Dangerous Game
Regulators from the Competition and Markets Authority, Ofcom, Ofwat, Ofgem, and a host of others have been summoned to this growth rallying cry. Reeves wants answers, and she wants them now: how will they cut red tape, spark innovation, and, presumably, ignore their actual mandates to ensure fair competition, protect consumers, and regulate essential services? You know, the jobs they were set up to do.
The Federation of Small Businesses is chiming in too, singing from the same hymn sheet: less regulation equals more growth. “Grasp the opportunity,” they say, as if loosening standards has ever led to anything but chaos. And while small businesses undoubtedly need support, are they prepared for the fallout if these “growth measures” leave us exposed to another economic shock?
Ashley Alder’s Refreshingly Sane Voice
In this cacophony of growth-at-any-cost rhetoric, it’s a relief to hear FCA chair Ashley Alder deliver a rare note of caution. Speaking to the Treasury Select Committee last month, Alder stated in no uncertain terms: “This is not a return to pre-crisis light-touch regulation.
Because, frankly, that ended in tears. Not just in the UK, but elsewhere.”
Alder’s comment should serve as a stark reminder. The “light-touch” era of regulation is synonymous with risk, excess, and catastrophic failure. But Reeves’ Mansion House speech in November suggests she isn’t listening. There, she bemoaned the post-crisis regulatory reforms as having “gone too far,” calling for a greater focus on growth. That’s politician-speak for “let’s loosen the rules again and hope for the best.”
A Familiar Boom-and-Bust Cycle
It’s worth noting that the UK economy’s recent “return to growth” is more of a polite cough than a resounding cheer. A meagre 0.1% rise in GDP for November—lower than economists’ already modest expectations—is hardly the rallying cry for reckless deregulation. And yet, the Government seems determined to ignore the warning signs.
Historically, recessions occur every seven years or so as part of the boom-and-bust cycle. But the lessons of past downturns have clearly not stuck. We’ve seen this movie before: politicians prioritise short-term gains over long-term stability, regulators are pressured to back down, and the public ends up footing the bill when it all goes wrong.
Will We Ever Learn?
What makes this all so maddening is the sheer predictability of it. The warnings from regulators, the cautionary tales of history, the red flags—they’re all there, waving furiously. Yet here we are, watching as the Government seems intent on playing chicken with the economy.
If this is growth, it’s growth built on a foundation of sand. And when the inevitable collapse comes, no doubt the same politicians pushing for deregulation now will shrug their shoulders and blame “unforeseen circumstances.” Well, here’s the thing: it is foreseen. The regulators are warning us. History is warning us. The only question is whether anyone in No. 11 is willing to listen.
Comments