14th September 2011
Following a comment on Mindful Money economist Shaun Richard's blog we decided to ask Julie Meyer – online "dragon" for the BBC's Dragons' Den, chief executive of the investment firm Ariadne Capital, and a member of the Entrepreneurs' Forum – her opinion.
Shireblogger writes on Julie's Newsnight appearance: "Julie brought some reality to the Vickers debate and expressed the view that all the talk of ring fencing banks will become subsumed by events…"
Here Julie Meyer talks to Mindful Money:
Will these reforms make banking safe? "I think this is a dodge and this is completely beside the real issue that's facing the country."
What is the real issue? "The real issue as a nation is how to grow the economy – that is what we should be spending all of our time focusing on."
What would help growth? "Building the economy means growing SMEs and providing the right environment for this to happen. We should be creating a positive tax environment – we could be making tax concessions/ benefits for SMEs and the employees who work for them. We should do that and force the lending targets for banks – particularly the ones that we own – as I am skeptical that this is being done. We should also grow content, IT, media companies – the rest of the vertical industries that the UK is strong in."
So we shouldn't focus on the banks? "Such an important issue is how we get the economy growing again that we have to choose as a nation between strong banks or a strong economy – we know growing the economy is about growing SMEs.
"At a time of national crisis when the economy is in the situation that it's in to try to spend mental energy time propping up banks and so forth isn't the right way to do things – and anyway the changes are not going to be implemented for eight years. The banks of tomorrow are going to innovate and look different anyway – it's a complete dodge. Meanwhile we have a full economic cycle that will come and go."
Why won't the proposals work? "The simple fact is we will never see the light of day and we will get so wrapped up in the complexity and granularity of it and carving up this and that that the economy seven years later won't be any better off and the SMEs won't have the capital to grow their businesses."
Who should we be listening to and helping? "Banking is not the only industry – we have a wealth of expertise and growing entrepreneurs and the economy needs to hold them, and their businesses need lending."
Why won't regulation help? "Financial services is a global industry and we can't regulate at a national level – we need to get our economic house in order. Should there be a financial crisis of any sort then it will always come at a different way than the other one did – why don't we try a national surplus for a change then we can withstand whatever shock came our way."
What has been done wrong? "The strongest position we can be in is to have a national surplus. Then whatever shock happens – there's always going to be a crisis as capitalism doesn't prevent crisis – there will always be ups and downs. But to have these crises hit us from a position where we have money in our national bank account whereby we can withstand it better. The real travesty is that we went into the banking crisis and it hit us after ten years of growth when we should have been saving for a rainy day with the money that we made while the sun was shining."
When do you think the changes will take effect? "The proposed split I don't believe will ever come into effect – the complexity will become too involved, and meanwhile we will become focused on getting the economy moving and we will drop this."
Really, so you don't think it will ever happen? "The level of complexity still needs to be decided – there will be years of deciding this and meanwhile industries change and evolve constantly and it will simply bypass – as innovation always does to regulation."
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