Latest News / Mark Carney: 2007 banking crisis left Britons £20,000 worse off
Mark Carney: 2007 banking crisis left Britons £20,000 worse off
13 September 2017
The governor of the Bank of England has said the 2007 banking crisis left people in Britain an average of £20,000 worse off.
As the 10th anniversary of the collapse of Northern Rock approaches this week, Mark Carney insisted that measures have been put in place to avoid the crisis ever happening again.
He said the financial system was now "safer, simpler and fairer".
He told the Sun: "When the global banking crisis hit, it spread panic through a banking system built on weak foundations and it left everyone in Britain an average of £20,000 worse off.
He added: "By fixing the faults that caused the crisis, the financial system is... safer because it has 10 times more capital - money put up by investors - to withstand losses.
"It's simpler because the complex web that caused panic to spread in 2007 has been untangled."
He added that investors - not taxpayers - would now foot the bill if a bank fails, making it fairer for all.
But Sir John Vickers, the economist who led a major review of the UK's banking industry after the financial crash, has warned that more needs to be done to protect the economy from another meltdown.
Sir John said the system was only around “halfway” to where it should be in terms of the capital buffers banks are required to have to protect against a financial shock.
He said there had been some “good building” but there was an opportunity to go further and he was “very disappointed” that the Bank of England under Mark Carney appeared to consider that enough had been done.
He told BBC’s Newsnight: “I’m really very disappointed that the Bank of England does take the view that it now takes – very different from the one Mervyn King took when he was governor – (and) think that we have built enough in terms of capital buffers.
“I would say we are roughly, global level, halfway of where we ought to be.
“I believe we would be in huge trouble if a very large, very complicated banking institution got into trouble.”
Sir John, a former Bank of England chief economist, added: “I think we’ve done some good building but there’s an opportunity there to go a lot further, which should be taken. But the current policy stance is, no we don’t need to.”
A decade on from the collapse of Northern Rock, Sir John said there were now tools available to regulators which “shift the odds in a slightly more favourable place”.
“But I certainly wouldn’t bet on those working perfectly.”