Honest approach is right approach for economy says bank chief
A LEADING figure in the UK banking industry told an audience of Yorkshire business leaders how honesty will help the economy to recover.
Former MP Angela Knight, who was born in Sheffield and was Economic Secretary to the Treasury from 1995 to 1997, said although the banking sector had had to take responsibility about the problems which have hit the industry and the wider economy, it was still waiting for others to follow suit.
These included the Government regarding its share of the responsibility for the bust in the economy and others for not operating monetary policy to avoid the asset bubble, she said.
Mrs Knight, who is chief executive the British Bankers’ Association, an organisation which is the principal trade association for banks operating in the UK, told the audience at the quarterly meeting of the Leeds Financial Services Initiative (LFSI) at the Queens Hotel in Leeds, that mistakes were made in the UK and other countries by not taking the sub-prime issue in the US seriously enough and early enough.
She said that those who saw sub-prime merely as a one off had “spectacularly dropped the ball”.
“We’ve got to recognise that the problems of the past 15 months have been extreme and diverse,” said Mrs Knight, who added that following the nationalisation of Northern Rock and Bradford & Bingley only four banks were effectively running the UK’s mortgage market.
“We (banks) must take our share of responsibility. Not all banks have been as vigilant at managing risks as we could have been. But we now look forward to hearing the regrets of others (sectors).”
But she said she believed that a series of regulatory regulations had to be addressed in order to prevent recent problems in the banking sector being repeated.
“If we are to make the recovery of the UK economy as likely as possible there’s got to be an honesty about what has happened but honesty about where we are now because that’s the way to target the way to recovery,” she said.
Mrs Knight highlighted the economic problems of Japan and Sweden in recent years as two examples of different approaches to economic recovery.
She said Sweden had recovered quicker because of its “honest” approach to where its problems lay.
Earlier this week, Mrs Knight said the BBA welcomed Chancellor Alistair Darling’s announcements in the pre-Budget report to boost the UK economy.
She said that she hoped the steps announced would bring more confidence to companies and would help banks recover as they were keen to lend to businesses.
