For City AM, Prof Philip Booth writes, Thatcher changed the City forever but Big Bang isn’t the whole story:

Let’s be absolutely clear: in general, the 1980s was not a period of financial deregulation. Insider trading was made illegal in 1980. The life insurance industry, which had been almost free of regulation for over 100 years from 1870, was re-regulated from 1980 to 1982. Bank deposit insurance was introduced in 1979. The sale of investment and insurance products came under statutory regulation from 1986. Further, the first ever regulation of UK bank capital took place under Basel I, agreed while Thatcher was Prime Minister.

It certainly could be argued that this increase in regulation made the financial sector more opaque, created moral hazard and made a crash more likely. Though this is probably not what Thatcher’s critics have in mind.

He concludes,

So, two things are clear when it comes to Thatcher’s legacy. In many respects she increased regulation of the financial sector in ways previous governments had not considered. Secondly, the most important feature of the Big Bang was that it took regulatory responsibility away from the markets and gave it to the state. In this area Thatcher was a pragmatist, not an unalloyed free market supporter. If these policies led to the crisis, those on the left have some thinking to do.

And there’s the problem: as I have argued many times, including in an article for a forthcoming book, the problem with money, banking and finance is the systematic intervention of the state. It’s that statism which led us into our present problems.

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