Rachel Reeves emphasized the need for reduced regulations in her Mansion House speech, suggesting that excess caution stifles economic growth. She argued that cutting red tape could stimulate innovation and entrepreneurship. However, the past shows that financial deregulation can lead to significant crises, as seen during the global financial crash of 2008, where diminished oversight resulted in reckless speculation. This history highlights the potential dangers of prioritizing deregulation over sustainable economic growth.
Regulation was acting like a boot on the neck of business, choking off enterprise and innovation. Cutting red tape would have a ripple effect on the whole economy.
Instead of providing backing for startup businesses, easy money led to ever more reckless speculation and a giant credit bubble. The inevitable crash led to a deep recession.
The global financial crisis of 2008 came about because policymakers bowed to the pressure from big finance to sweep away burdensome regulations.
Speculators may do no harm as bubbles on a steady stream of enterprise, Keynes said. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation.
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