Britain’s Trade Unions Congress has published projections showing the increasingly unbalanced growth of the UK economy. As you can see from this map, economic activity is skewed in the direction of England’s south-east region, which includes London. It’s forecast to produce 40.1 percent of the UK’s gross domestic product by 2022. Given the importance of the City of London’s offshore financial centre to the region, this is a vivid demonstration of the Finance Curse in action.
In early September 2017, ten years after the collapse of UK bank Northern Rock, TJN will be publishing a special edition of Tax Justice Focus, guest edited by Professor Daniel Mügge (University of Amsterdam) which draws on fresh research from the EU-funded Enlighten programme. In this article Professor Mugge argues that faced with intractable problems of rising debt, and the obvious limitations to what financial regulators can achieve in the face of a hugely oversized financial sector, debt forgiveness must be added to the policy list if we are to avoid chaos in the global economy.
The Globalist has just published an article by Helmut Reisen, former Head of Research at the OECD’s influential Development Centre, in which he discusses the developmental impact of the recent fall in the value of sterling. He comes to similar conclusions to those we blogged last month; allowing the pound sterling to decline in value against other currencies might provide just the boost needed for other productive export sectors to thrive while at the same time reducing the size of Britain’s over-sized finance sector, which is overly geared to wealth extraction rather than wealth creation. In Reisen’s own words:
” . . a more competitive British pound and a reduced size of the country’s finance sector are definitely two things worth striving for.”
Our thoughts exactly, and we are pleased to see our Finance Curse analysis referenced in the article, since we have consistently cited the UK political economy as a case study of how an over-sized financial sector does more harm than good. Read more about the Finance Curse here.