Brexit vote is outcome of financial crisis, says Darling
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’