Bank of England Governor Andrew Bailey hits back at Rachel Reeves over regulation
The Bank of England Governor made clear that he did not share Reeves' recent claim that the enforcement of red tape acted as a 'boot on the neck' of business.
Speaking to MPs on the Treasury select committee, he urged caution over a proposed shake-up of the ring-fencing system that separates traditional lending and deposit-taking from riskier investment banking.
The comments appear to be a shot across the bows of the Chancellor as she seeks to unravel some of the reforms put in place during the financial crisis in a bid to boost growth.
They suggest she may face an unwanted battle with Threadneedle Street to add to friction with Labour backbenchers over spending cuts and the battle to balance the books, amid dismal economic growth and deteriorating public finances.
Reeves took aim at regulators during her Mansion House speech to the City earlier this month.
Cautious: Andrew Bailey (pictured) made clear he did not share Rachel Reeves's claim that the enforcement of red tape acted as a 'boot on the neck' of business
But Bailey chose to dissociate himself from the 'boot on the neck' comments. He said: 'It's not a term I'd use.
'I think there are areas that we clearly should look at it – we've announced a whole range of things we're doing, and that's a good thing. But we can't compromise on basic financial stability and that would be my overall message.'
Reeves has also promised 'meaningful reform' of the ring-fencing regime – something being demanded by the bosses of a number of major banks who say they are a drag on business.
But Bailey said he favoured keeping the rules. He told MPs: 'I do think that the ring-fencing regime is an important part of the structure of the banking system.'
Bailey said the rules make it easier to deal with banks that get into trouble in a way that spares consumers, businesses and households.
He added: 'I'm sure there are things that can be improved and we will work constructively to get through that process.
'I think it has established itself as part of the system and to me it would not be sensible to take it away at this point.'
Asked how he would respond if the Treasury seemed to be going 'too far' in stripping back regulation, Bailey said he and Bank officials would 'start by making our views very clear'.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
20 minutes ago
- Reuters
Japan's Nikkei surges to one-year peak, bonds slide on US trade deal
TOKYO, July 23 (Reuters) - Japanese automakers led a surge in the Nikkei share average to a one-year peak on Wednesday, while bonds slid after Tokyo reached a trade deal with Washington, ending a months-long stalemate. The Nikkei (.N225), opens new tab rallied as much as 3.3% to 41,070.91, its highest since July last year. The Tokyo Stock Exchange's transport equipment index (.ITEQP.T), opens new tab soared 10.3%, with Toyota Motor (7203.T), opens new tab surging more than 13%. The trade deal reduced economic uncertainty, bolstering the case for the Bank of Japan to resume raising interest rates. Traders sold Japanese government bonds, pushing two-year yields up by 7 basis points (bps) to 0.82%, the highest since April 2, when U.S. President Donald Trump shocked markets with his aggressive "Liberation Day" tariff announcement. Markets largely shrugged off a media report that Japanese Prime Minister Shigeru Ishiba would step down by the end of August. Ishiba is facing growing opposition from within his Liberal Democratic Party for his vow to stay in power despite the ruling coalition's defeat in Sunday's upper house election. The yen was last down about 0.2% at 146.96 per dollar . Trump said on Tuesday the U.S. and Japan had struck a trade deal that includes a 15% tariff that will be levied on U.S. imports from the Asian country, down from a threatened tariff of 25%. Industry and government officials briefed on the agreement said the deal also lowers the tariff to 15% from 25% on Japanese autos, which account for more than a quarter of the country's exports to the U.S. "It is commendable that the 25% baseline tariff was avoided," said Norihiro Yamaguchi, senior Japan economist at Oxford Economics in Tokyo. "Lowered uncertainty will be welcomed in the equity market." Bank shares gained, sending the TSE's banking index (.IBNKS.T), opens new tab up 4.5%. The 10-year JGB yield jumped 9.5 bps to 1.595%, matching last week's 17-year high. Ten-year Japanese government bond futures tumbled as much as 1.04 yen to 137.56 yen, their lowest since March 28. Deputy BOJ Governor Shinichi Uchida said the central bank needs to focus on downside risks to the economy. His comments came ahead of a BOJ policy meeting next Wednesday and Thursday. "I don't think this (trade deal) alone will lead to a Bank of Japan rate hike next week, but the possibility of a rate hike between September and October has increased," said SMBC chief currency strategist Hirofumi Suzuki. "This will create pressure to buy the yen."
Times
an hour ago
- Times
Government and opposition alike must do much better
Out of the three parties that matter most, only one will be looking forward to autumn. When parliament packed up for the summer recess this time last year, the new Labour administration had a stonking majority, a sense of confidence and a clear plan of action. Twelve months on, morale has collapsed. Rarely have a government's fortunes declined so far, so fast. This is not the consequence of world events or the vagaries of the global economy: Sir Keir Starmer is to blame. He came into power with the stated aim of boosting the economy's performance to improve public services. But prioritising growth demanded a degree of discipline that he has signally failed to demonstrate. Although the government has chalked up a few achievements — for instance, in reforming the planning system — too often other considerations have taken precedence over growth. Workers' rights have been strengthened to the detriment of companies. Taxes on employers have been raised with the consequence that firms are hiring fewer people. Higher pay for public servants has contributed to the deterioration of public finances. The government's big effort to rein in spending centred on its planned reform of the welfare system, but Labour backbenchers rebelled against it. Instead of facing up to the rebels by making the issue a vote of confidence, the prime minister backed down. Predictably, this cave-in has encouraged further dissent. The prime minister's problem is that he is a conciliator rather than a leader. That is why he has proved to be an effective diplomat in his dealings with foreign leaders. With his low-key style, he has succeeded in improving Britain's relationship with Europe, in encouraging European leaders to co-operate over defence and in establishing a good working relationship with Donald Trump, despite the two men's glaring ideological differences. These external successes cannot compensate for Sir Keir's domestic failures, however. They have cost him credibility and the economy momentum. In the past two months, national output has shrunk while public debt continues to mount. In June, the government borrowed £20.7 billion. That is £6.6 billion more than in June last year and £3.6 billion more than expected. As Sir Keir has lost focus on the economy, concentrating on averting short-term difficulties rather than pursuing a coherent agenda, he has come to look like a tactical politician rather than a strategic one. Both MPs and voters are increasingly unclear about what his government is for. Labour is divided between pragmatists who want order in the public finances and leftwingers who want to spend more. The autumn budget, in which Rachel Reeves will have to reconcile the conflicting demands of the bond markets and Labour MPs' desire to protect social spending, will be a pivotal moment in the government's life. Sir Keir's greatest boon has been the state of the Conservative Party. Despite a welcome recent attempt to reassert the party's commitment to fiscal rectitude in the wake of the government's welfare debacle, Kemi Badenoch has failed to establish a clear identity around which her party can coalesce. At 23.7 per cent, its share of the vote in the last election was the lowest yet; it has declined further in polling since then, to 17 per cent. This week's reshuffle will not by itself reverse the Tories' decline: changes in personnel cannot compensate for the lack of a compelling story. The one party that has succeeded in devising one in the past year is Reform. Nigel Farage has capitalised on the loss of direction in both main parties to seize a commanding lead in the polls. Sir Keir and Ms Badenoch need to develop better ways of countering Mr Farage over the summer, or he will make short work of them in the coming year. For both, it is a case of 'must do better'.
Sky News
an hour ago
- Sky News
Two hour screen time limit and curfews for children being considered by government
Why you can trust Sky News Social media limits for children are being planned by the government to tackle "compulsive" screen time, the technology secretary has told Sky News. Peter Kyle said he was concerned about "the overall amount of time kids spend on these apps" as well as the content they see. A two-hour cap per platform is being seriously considered after meetings with current and former employees of tech companies. A night-time or school-time curfew has also been discussed. Children would be blocked from accessing apps such as TikTok or Snapchat once they have hit the limit, rather than just reminded of how long they have been scrolling, it is understood. An announcement on screen time is expected this autumn. Mr Kyle said: "I'll be making an announcement on these things in the near future. But I am looking very carefully about the overall time kids spend on these apps. "I think some parents feel a bit disempowered about how to actually make their kids healthier online. "I think some kids feel that sometimes there is so much compulsive behaviour with interaction with the apps they need some help just to take control of their online lives and those are things I'm looking at really carefully. "We talk a lot about a healthy childhood offline. We need to do the same online. I think sleep is very important, to be able to focus on studying is very important." He added that he wanted to stop children spending hours viewing content which "isn't criminal, but it's unhealthy, the overuse of some of these apps". "I think we can incentivise the companies and we can set a slightly different threshold that will just tip the balance in favour of parents not always being the ones who are just ripping phones out of the kids' hands and having a really awkward, difficult conversation around it," he added. Mr Kyle spoke exclusively to Sky News after meeting with a group of pupils from Darlington who have spent a year participating in regular focus groups about smartphones and social media, organised by their Labour MP Lola McEvoy. They took part in a survey of 1,000 children from the town, mostly aged 14 and 15, which found that 40% of them spent at least six hours a day online. One in five spent as long as eight hours scrolling. Most of the under-16s (55%) had seen inappropriate sexual or violent content - often unprompted. And three-quarters of the under-16s had been contacted online by strangers. In the session in parliament, in which the children were asked what they were most concerned about, Jacob, 15, said: "A lack of restrictions on screen time I would personally say, which leads to people scrolling for hours on Tiktok. "People just glue their eyes to their phone and just spent hours on it, instead of seeing the real world." Tom, 17, said: "I get the feeling you have to be quite tech savvy to protect your kids online. You have to go into the settings and work out each one. It should be the default. It needs to be straight away, day one." Matthew, 15, said: "I think because everybody is online all the time and there's no real moderation to what people can say or what can be shared, it can really affect people's lives because it's always there. "As soon as I wake up, I check my phone and until I go to bed. The only time I take a break is when I eat or am talking to someone." Some of the teenagers had spent 12 or even up to 16 hours a day online. Nathan, 15, said: "When, for example, a 13-year-old is on their phone 'til midnight, you can't sleep, your body can't function properly and your mind is all over the place." But there was scepticism about what could be done. Charlotte, 17, said: "If your parents sets a restriction on Instagram and say, 'right, you're coming off it now' - there's TikTok, there is Pinterest, there is Facebook, there's Snapchat, there so many different other ones, you can go on, and it just builds up and builds and builds up, and you end up sat there for the entire evening just on social media. I think we need harsher controls." Several of the pupils who met Mr Kyle detailed being contacted by adult strangers, either on social media apps or online gaming, in ways which made them feel uncomfortable. How could the ban actually work? The tech already exists to make a ban like this a reality. On Friday, rules will start being enforced in the UK that will mean sites hosting harmful adult content will need to properly check the ages of their users. There are a number of ways companies could do that, including credit card checks, ID checks and AI facial age estimation. It is likely these are the same systems that would be used to keep teenagers off social media during certain hours, as suggested by Peter Kyle to Sky News. It's how Australia is looking into enforcing its total ban of under-16s on social media later this year - but the process isn't without controversy. Concerns around privacy are frequently raised as internet users worry about big tech companies storing even more of their personal data. There are also questions about just how effective these age verification processes could actually be. Tech like AI facial estimation can reliably age-check users - but teenagers may quickly work out how to circumvent the system using plugins and settings that could be a mystery to all but the savviest parents. At the moment, a lot of age-checking AI systems are trained to spot the difference between an adult and a child, and can do that to a high degree of accuracy. But while telling the visual difference between a 15-year-old and a 17-year-old is much harder, AI learns fast. Officials working on the UK's age verification scheme have suggested AI will soon be able to accurately verify the ages of under-18s, making a ban like this much more realistic. Mr Kyle said: "It is madness, it is total madness, and many of the apps or the companies have taken action to restrict contacts that adults - particularly strangers - have with children, but we need to go further and I accept that. "At the moment, I think the balance is tipped slightly in the wrong direction. Parents don't feel they have the skills, the tools or the ability to really have a grip on the childhood experience online, how much time, what they're seeing, they don't feel that kids are protected from unhealthy activity or content when they are online." The tech secretary is in the process of implementing the 2023 Online Safety Act, passed by the previous government. From this Friday, all platforms must introduce stronger protections for children online, including a legal requirement for all pornography sites accessed in the UK to have effective age verification in place - such as facial age estimation or ID checks. Mr Kyle added: "I don't just want the base level set where kids aren't being criminally exploited and damaged, that shouldn't be the height of our aspirations. The height of our aspirations should be a healthy experience." Labour MP Lola McEvoy, who organised the focus group, said: "I knew things were bad online for children and young people but their testimony revealed the extent of explicit, disturbing and toxic content that is now the norm. "Their articulation of the changes they wanted to see was excellent and they've done our town and their generation proud." Tiktok, Pinterest, Meta and Snapchat were contacted for comment, but none provided an on the record statement. The companies have accounts for under-16s with parental controls and some set reminders for screen time. TikTok has a 60-minute daily screen time limit for under-18s after which they must enter a password to continue, and a reminder to switch off at 10pm. The company say this is to support a healthy relationship with screen time. Pinterest have supported phone-free policies at schools, in the US and Canada and say they are looking to expand this elsewhere.
