UK coalition may yield more “sensible” financial reform — The Economist

May 14, 2010

Britain’s new coalition government may come up with a better approach to financial reform than the Liberal-Democrats and Conservative¬† partners would do invididually, and any compromise “will go further and faster” than the ousted Labour government,¬† The Economist writes.

The magazine approvingly notes the first compromise, in which the Conservatives dropped the idea of abolishing the Financial Services Authority and instead agreed to retain the agency while making the Bank of England the protector of long-term financial stability.

In a similar manner, the Liberal Democrats’ aims of breaking up big banks have been tempered by plans to study the issue for a year.

A telling difference between the two, it said, is their approach to banking, where the Liberal Democrats look outside of London and emphasize customer ownwership, while the Conservatives are more tied to the City of London.¬† Until these gaps are bridged, it said “expect a tug-of-war between Hobbit-town and the City.”

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