Facing 'a financial Chernobyl'

Published on Monday 20 July 2009 01:03

BRITAIN'S banks have become "the financial equivalent of Chernobyl" and radical safety measures are required to make them less of a threat to the country's economy, Liberal Democrat Treasury spokesman Vince Cable is due to say today.

In a speech to the London Stock Exchange, Mr Cable is set to say that major reforms are needed to the banking regulation system, including measures to make it easier for large institutions to fail without the state being forced to step in and save them. Mr Cable will say there is a long-term role for state banking in the UK economy, even after the current crisis has abated, and will argue against a quick sell-off of the government-owned banks.

And he will repeat his calls for the Financial Services Authority to keep its role as regulator of the banking industry and for the scrapping of the government's "woefully misconceived" Asset Protection Scheme.

Mr Cable will say: "The large, failed, British banks are the financial equivalent of Chernobyl. Like the former Soviet Union, the UK became over-reliant on dangerous financial reactors."

Meanwhile, George Osborne has promised a "culture change" throughout government to balance the nation's books, if the Tories come to power.

The shadow chancellor, speaking on the BBC's Andrew Marr Show, refused to rule out tax rises but said cutting spending was his preferred route to restoring public finances.

He also pledged to abolish the Financial Services Authority, if the Conservatives win the next general election.