Brexit vote is out­come of fi­nan­cial cri­sis, says Dar­ling

The Guardian - - FINANCIAL - Jill Tre­anor

The UK would not have voted for Brexit had it not been for the bank­ing cri­sis which be­gan 10 years ago with the run on North­ern Rock, for­mer chan­cel­lor Alis­tair Dar­ling said yes­ter­day.

Lord Dar­ling said the con­se­quences of the cri­sis were still be­ing felt to­day. “This fi­nan­cial cri­sis clearly trau­ma­tised a lot of peo­ple,” he said. “I think if you look at to­day’s po­lit­i­cal sit­u­a­tion you can trace it back to events of 10 years ago when peo­ple’s faith in struc­tures and author­ity was shaken … a fi­nan­cial cri­sis be­came an eco­nomic cri­sis and that eco­nomic cri­sis be­came deeply po­lit­i­cal.

“The rhetoric was all about aus­ter­ity. It’s af­fected peo­ple’s stan­dard of liv­ing … peo­ple felt ‘this is not my fault’.”

Dar­ling, who stepped down as a Labour MP be­fore the 2015 gen­eral elec­tion, said the sit­u­a­tion cre­ated a di­rect line to Brexit. “I don’t think Brexit would have hap­pened if it hadn’t been for the po­lit­i­cal and eco­nomic events of the pre­ced­ing 10 years,” he said. “Peo­ple were dis­il­lu­sioned. They felt badly treated. They felt squeezed.”

The run on North­ern Rock be­gan on 14 Septem­ber 2007 af­ter the BBC re­ported that the New­cas­tle-based lender had re­ceived emer­gency fund­ing from the Bank of Eng­land. It was the first run on a high street bank in the UK since Ov­erend Gur­ney in the 1860s. The bank was even­tu­ally na­tion­alised in Fe­bru­ary 2008.

Dar­ling was speak­ing at an event in Lon­don or­gan­ised by the Res­o­lu­tion Foun­da­tion think­tank to mark the 10th an­niver­sary of North­ern Rock’s col­lapse, where Nicky Mor­gan, the Tory MP and new chair of the Trea­sury se­lect com­mit­tee, said the bank­ing cri­sis was still raised by vot­ers on the doorstep. Mor­gan said con­stituents say that if the gov­ern­ment could find the money to bail out North­ern Rock, Lloyds and RBS, why could it not pro­vide pub­lic money for the causes they backed. “The bank­ing cri­sis has led to a real ‘them and us’ cul­ture,” she said.

Dar­ling said the cri­sis and the aus­ter­ity poli­cies that fol­lowed had an im­pact be­yond the UK: with­out them, “Trump would never have been elected”. He called aus­ter­ity the “big­gest po­lit­i­cal fail­ure”.

He also crit­i­cised the con­tin­ued use of elec­tronic money print­ing – quan­ti­ta­tive eas­ing – which he said was “never in­tended to be the eco­nomic weapon of choice”. He warned that the pub­lic needed to be pre­pared for a rise in in­ter­est rates from their his­tor­i­cally low lev­els since the cri­sis.

Mor­gan said the po­ten­tial im­pact of rate rises on con­sumer credit should be mon­i­tored. Her com­mit­tee will meet for the first time since the elec­tion to­day, and Mor­gan said she was keen to in­ves­ti­gate the is­sues around house­hold debt.

She said: “[We] want to look at the whole is­sue of house­hold debt, house­hold sav­ings, what’s hap­pen­ing, how the econ­omy is work­ing for peo­ple up and down the coun­try … Go­ing back to the rea­son for last year’s vote, there is clearly a sense it’s not work­ing.”

Lord Dar­ling said the bank­ing cri­sis and its af­ter­math ‘clearly trau­ma­tised a lot of peo­ple’, who felt dis­il­lu­sioned and fi­nan­cially ‘squeezed’

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