Thursday, 27 October 2011

Was the Big Bang Good for the City of London and Britain?

THE DAILY TELEGRAPH: The stock market was deregulated 25 years ago today, reprising the City’s golden age, but the 1980s boom is ultimately responsible for our current bust.

The eurozone unravelling, the governor of the Bank of England announcing the most serious financial crisis since the 1930s, Tent City dug in next to St Paul’s – it is piquant timing for today’s 25th anniversary of the City of London’s Big Bang. Researching and writing the City’s history, I used to find potential readers confronted by a double barrier: the perception that the City was not just incomprehensible but also boring, reflecting, as that old Monty Python sketch had it, “the dull life of a City stockbroker”. The City probably remains baffling to most people, but since the crash of 2008 no one can deny its interest and importance.

Big Bang itself, on October 27, 1986, coincided with the coming of screen trading, but was essentially about deregulating the Stock Exchange. Above all, it enabled 100 per cent outside ownership of member firms – a move enforced by the Thatcher government on a largely reluctant City, so that London could operate on a modern, properly capitalised basis as an international financial centre.

For those with a historical perspective, undoubtedly including Margaret Thatcher’s chancellor, Nigel Lawson, the gleam in the eye was the hope of reprising the City’s golden age, when London was the greatest financial centre the world had ever seen, disbursing capital and credit around the globe, before the guns of August 1914 changed everything.

The arrival of the Euromarkets in the 1960s, followed by the floating of exchange rates and abolition of exchange controls, began the re-internationalisation of the City, but Big Bang took it much further: a legion of deep-pocketed commercial banks, often foreign, bought up long-established broking and jobbing firms such as James Capel, Phillips & Drew, Panmure Gordon and Wedd Durlacher, while simultaneously ambitious American investment banks such as Goldman Sachs beefed up their London presence and would rapidly supplant the British merchant banks, traditionally the City’s crème de la crème

The gleam came to fruition. During the 1990s, neither Frankfurt nor Paris mounted a credible challenge to London as top European financial centre; by the new century, London was ahead of both New York and Tokyo in global terms; and for successive British governments, the City proved an almost miraculous (and relatively uncomplaining) cash cow, funding new hospitals and schools and much else besides. Yet, as all this went on, I would find myself wondering whether the new City that had emerged out of Big Bang was really so much better than the old City. » | David Kynaston | Wednesday, October 26, 2011

David Kynaston’s 'City of London: The History’, published by Chatto on November 3 (RRP £30) is available from Telegraph Books for £26 plus £1.25p p&p. To pre-order your copy please call 0844 871 1515 or go to

My comment:

So many of us were taken in by Maggie Thatcher at the time. Few of us had a crystal ball, so few of us could foresee the disgusting greed and egocentricity her policies would eventually bring with them. Mrs. Thatcher was a disaster for this country, as was the Big Bang.

I supported Thatcher at the time. In fact, I was a huge fan of hers. But as time has gone by, I can see the destruction that her American-style, jungle-like economic policies have brought with them. She has ruined so much of what was good about this country. The City would not today be populated by banksters, shysters, and crooks had Thatcher not wrought her destruction of the British way of doing things. To undo the damage she has done is probably well-nigh impossible. In any case, it is going to take years and years before this mess is cleared up, if it ever will be.

As a result of Thatcher, people have lost their homes, their life-savings, and their jobs; as a result of Thatcher, this country has lost its soul.
– © Mark