The City of London is the most successful financial centre in modern history, now well into its third century as a leading banking hub. In 2007, nearly 200 years after its funding power played a crucial role in the defeat of Napoleonic France, it produced more than one quarter of all British corporation tax revenues.
For the UK, a country which is rather self-conscious about its perceived lack of world-beaters, this grand entrepot crowded against the Thames has been a source of pride. Before the crisis, British politicians, for some years, conducted elaborate liturgies of devotion before mighty finance, humbly promising not to get in its way.
So, the view expressed by Lord Turner, chairman of the Financial Services Authority, in an interview published last week that parts of the British financial sector might be larger than is “socially optimal” is uncomfortable. He is, however, right, and his intervention is symbolic of the welcome change in attitude at the FSA since he took charge at the supervisor.