Did Big Bang Change Britain For The Better?
The deregulation of the London Stock Exchange transformed the City, but what of its impact on the rest of the country?
Twenty years ago, a cosy old-fashioned gentleman's club in London EC2 reluctantly altered its rulebook. Put like that, it doesn't sound very explosive, but the club was the Stock Exchange and the reforms paved the way for profound financial and cultural changes.
The immediate effect of Big Bang was to blow apart a closed shop. Out went minimum commissions and other restrictions; in came a stampede of foreign firms replacing those that had previously dominated.
The results are hard to argue with. Big Bang catapulted London back to a position of ascendancy in global financial markets. That brave decision brought wealth, jobs and a cosmopolitan buzz to a once-sleepy City, and banished the overcooked cabbage forever.
There were certainly downsides. Many mourned the loss of civilised working hours; others criticised the Wimbledonisation of the City – that London merely provides the venue for foreign-owned investment banks to make hay – a complaint that will only really be tested come the next financial slump.
Big Bang detonated something akin to a Year Zero effect among Britain's biggest businesses, but the social impact was still more pernicious. It came to embody the loadsamoney possessive individualism of Thatcher's Britain, fuelling gross inequality and a cultural apartheid whose effects are still being felt in the brutal impact of house price inflation on the poor and young, and an ever-widening income gap. Big Bang marked the moment when democracy let slip whatever grip it may once have had on the City.
However, without the thriving City's annual £65bn contribution, Britain would have succumbed to a trade deficit crisis, slower economic growth and higher unemployment. Yet we cannot rest on our laurels. London has benefited from the artificial advantage of over-zealous legislation in the US, but the tide there may be turning.
Meanwhile, the Government has done nothing to stop the UK Companies Bill becoming a Christmas tree laden with compliance burdens. If the Chancellor is as serious about safeguarding the City as he claims, he could start by taking a tennis racket to that.
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