Why pander to the City? Britain needs diverse economic growth.

TLDR:

• Labor leaders historically sucked up to the City of London in hopes of gaining favor.
• There are concerns about Labour’s current approach to the financial sector under Keir Starmer and Rachel Reeves.

In the article “Why does Labour need to suck up to the City? Britain’s economy is already stifled by finance” by Nicholas Shaxson, the author discusses the historical trend of Labour leaders bending to the will of the City of London in pursuit of electoral success. The article highlights the pitfalls of this approach, citing the financial crisis triggered by New Labour’s light-touch regulatory approach as a cautionary tale.

The current shadow chancellor, Rachel Reeves, is promising to champion the City in Labour’s plan for financial services, despite criticisms that this approach may be detrimental to the economy. The article warns against the embrace of competitiveness in the financial sector, which could exacerbate inequalities and hinder overall economic growth.

Shaxson also raises concerns about the negative impacts of excessive finance on the UK economy, pointing to studies that suggest a finance curse may be at play. The article argues for a more balanced approach to the financial sector, emphasizing the need to consider the net contribution of finance to the economy rather than focusing solely on gross benefits.

Ultimately, the article cautions against Labour’s current alignment with the City, warning that economic malaise could create opportunities for dangerous political forces to exploit. Shaxson urges a more critical and balanced approach to the financial sector to ensure long-term economic stability and growth.