LIAM HALLIGAN: The Big Bang liberated Britain from statist torpor. So why, 40 years on, is Labour intent on dragging us back?
The article argues that the 1986 “Big Bang” deregulation transformed the City of London by opening it to international competition and electronic trading. It presents the reform as a turning point that helped revive Britain’s financial sector and generate wealth, while criticising Labour for allegedly moving back towards higher taxes and greater state control.
The changes removed restrictions on banks and stockbrokers, welcomed foreign banks and helped shift trading away from the exchange floor. The article says corporation tax was cut from 52% to 35%, the basic income tax rate from 30% to 25% and the top rate from 60% to 40%. It also acknowledges concerns that the reforms encouraged a more transactional culture and excessive risk-taking, which some link to the 2008 financial crisis.
In short
- Big Bang deregulation reshaped London’s financial markets.
- The article credits competition and tax cuts with helping revive the City.
- It also notes concerns about risk-taking and the City’s culture.
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The case for
Supporters argue that the Big Bang dismantled outdated restrictions, brought in international competition and modern trading, and helped make London a more productive, globally connected financial centre. They see lower taxes and lighter regulation as ways to encourage investment and growth, and may regard Labour’s proposed return to greater state control as a risk to that dynamism.
The case against
Critics argue that the reforms also weakened safeguards and encouraged short-term, risk-taking behaviour, with costs that became clear in the 2008 financial crisis. They may favour stronger regulation and a larger role for government to limit systemic risks and ensure financial growth serves the wider public, rather than relying chiefly on market-led expansion.
Explained simply
The “Big Bang” was a package of changes to the City of London’s financial markets introduced in 1986. It removed rules that had restricted banks and stockbrokers, allowed more foreign firms to compete and helped move share trading from the exchange floor to electronic systems.
The changes took place under Margaret Thatcher’s Conservative government, which also cut several tax rates. Supporters say the reforms helped the City expand and attract business from abroad; critics argue they encouraged excessive risk-taking, which some connect to the 2008 financial crisis.
The article’s political argument centres on Labour and the role of the state in the economy. The background matters because debates about taxes and regulation often turn on how to balance economic growth and competition against the risks of financial excess.