Catch Up: Brexit Exposes Britain to Greater Shocks

New Economics Foundation: UK FINANCIAL SYSTEM IS ‘LEAST RESILIENT IN THE G7’

“The great financial crisis is still wreaking havoc through our politics and democracy and still costing households dearly. It’s deeply disturbing to see through this research how our system is still woefully exposed to shocks that could be even more cataclysmic.

“With the vast uncertainties of Brexit on the horizon, consumer debt rising, and wages failing to keep pace with inflation, just such a shock seems ever more likely. And our financial system is simply not ready for that.

“We need to see stronger regulation by the Bank of England to protect our financial system from over-exposure to risk. We also desperately need a more diverse banking system that invests in people, productivity and jobs and is responsive to the real needs of the different regions of the country.

“Above all, we must avoid a Brexit-induced race to the bottom on financial regulation. That way lies a disaster which could dwarf the financial crisis ten years ago.”

The New Economics Foundation makes four recommendations to improve the resilience of the UK’s financial system:

  1. Avoid a race to the bottom on financial regulation: Slashing regulation will create a less resilient financial system and jeopardise the long-term social and economic health of the UK

  2. The Bank of England should strengthen prudential and macroprudential regulation to mitigate risks posed by Brexit: This should involve increasing required capital levels for big, risky banks and examining other factors when assessing financial system resilience, including asset and liability composition

  3. The Treasury should urgently review options for addressing the lack of diversity in the UK banking system: For instance, RBS could be transformed into a network of local or regional retail banks with a mandate to serve their local area

  4. The Competition and Markets Authority should focus on diversity of provision in the banking sector, not just market share: Genuine competition requires a diversity of providers, not just more banks following the same business model.

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Resolution Foundation: On Housing Hammond is Stuck

But when it comes to the top political task of this Budget, rebuilding Conservative support amongst the young, there is someone else causing problems, despite not being part of the official opposition, or indeed an MP, for the last two years. The Chancellor finds himself sandwiched between a do nothing Budget and Ed Balls.

At the centre of this challenge is the role of house building. Many Conservatives have rightly noted that housing is the single biggest issue driving concerns about intergenerational fairness. By a margin of 2 to 1 people now think that today’s young will have a worse life than their parents, and by a huge net margin of 63 per cent believe they won’t have the chance of owning a home their parents had.

It’s that stark discontent that Sajid Javid, the Secretary of State responsible for housing, is tapping into when he says housing is “the biggest barrier to social progress in our country today”. His aim is to build up to 300,000 additional homes in England a year – double the current level of 150,000.

That is a huge increase, and one that simply won’t happen without large amounts of government spending. As is regularly noted, the big fall in house building since the 1970s has been driven largely by the state exiting the construction business.

But to date the government hasn’t followed that evidence through to its logical conclusion: that large state investment in house building is necessary if its targets are to be met.

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The Fabian Society: Towards a Trade Union Renaissance

Trade unionists are clear about the scale of the challenge they face, with one saying: “We can’t rest on our laurels – we have to adapt.” But they also reject claims that private sector union membership is in permanent decline, with every trade unionist interviewed saying they expected to see union density begin to grow in time.

Stemming membership decline will require changes in the way unions recruit, organise and support workers. But reversing 40 years of falling density will require more than change to individual union practice. It will require unprecedented levels of collaboration and partnership, with unions working together to bring millions more into the movement, and working with government and business to ensure the voices of workers are fully heard as the UK economy enters its fourth industrial revolution.

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