Britain: The Enthusiastic Transformation

  • Gregory W. Fuller


Though it was not top priority when she was elected, few of Margaret Thatcher’s reforms were as fundamental as her governments’ overhaul of the British financial system. When she entered 10 Downing Street in May 1979, British finance was cliquish, internationally closed off, and loosely controlled by the state. Within a decade, Tory policies successfully reforged it as a dynamic, internationally competitive, and thoroughly liberalized system. This transformation has proven remarkably durable: even after Labour returned to power in 1997, the Thatcherite approach toward financial markets established during the 1980s remained the British status quo. Britain, perhaps more than any other advanced economy, has adhered to the conventional wisdom that competitive, liquid, and deep financial markets—largely unhindered by state intervention—greatly benefit society.


Interest Rate Credit Card Pension Fund Mortgage Market Capital Control 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 2.
    Gordon Brown, Where There Is Greed: Margaret Thatcher and the Betrayal of Britain’s Future (Edinburgh: Mainstream Publishing, 1989).Google Scholar
  2. 3.
    Gordon Brown, Beyond the Crash: Overcoming the First Crisis of Globalization (New York: Simon & Schuster, 2010).Google Scholar
  3. 5.
    PricewaterhouseCoopers, The Total Tax Contribution of UK Financial Services (London: City of London, December 2010).Google Scholar
  4. 6.
    Nigel Lawson, Memoirs of a Tory Radical (New York: Biteback Publishing, 2011).Google Scholar
  5. 7.
    Graham F. Pimlott, “The Reform of Investor Protection in the U.K.—An Examination of the Proposals of the Gower Report and the U.K. Government’s White Paper of January, 1985,” Journal of Comparative Business and Capital Market Law 7 (1985): 141.Google Scholar
  6. 8.
    Katherine Watson, “The Financial Services Sector since 1945,” in Structural Change and Growth, 1939–2000, ed. Roderick Floud and Paul Johnson (Cambridge: Cambridge University Press, 2004), 167–88.Google Scholar
  7. 9.
    Ranald Michie, The London Stock Exchange. A History (Oxford: Oxford University Press, 2001);CrossRefGoogle Scholar
  8. Andrew J. Britton, Macroeconomic Policy in Britain 1974–87 (New York: Cambridge University Press, 1991);Google Scholar
  9. Susan Howson, “Money and Monetary Policy since 1945,” in The Cambridge Economic History of Modern Britain, Vol. III: Structural Change and Growth, 1939–2000, ed. Roderick Floud and Paul Johnson, vol. III (Cambridge: Cambridge University Press, 2004), 134–66.CrossRefGoogle Scholar
  10. 10.
    Material taken from an overview of J. H. B Tew, “Monetary Policy Part I,” in British Economic Policy, 1960–1974, ed. F. T. Blackaby (Cambridge: Cambridge University Press, 1978), 237–57;Google Scholar
  11. Anthony Saunders and Charles Ward, “Regulation, Risk and Performance of U.K. Clearing Banks 1965–75,” The Journal of Industrial Economics 25, no. 2 (December 1976): 143;CrossRefGoogle Scholar
  12. Ken Holden, Kent Matthews, and John L. Thompson, The UK Economy Today (New York: St. Martin’s Press, 1995); Howson, “Money and Monetary Policy Since 1945”; Watson, “The Financial Services Sector since 1945”;Google Scholar
  13. Forrest Capie, The Bank of England: 1950s to 1979 (New York: Cambridge University Press, 2010).CrossRefGoogle Scholar
  14. 11.
    Andy Mullineux, UK Banking After Deregulation (Hoboken: Taylor and Francis, 2012).Google Scholar
  15. 12.
    Capie, The Bank of England; Geoffrey E. J. Dennis, “Money Supply and Its Control,” in The British Economy in the 1970s, ed. W. P. J. Maunder (London: Heineman Educational Books, 1980), 35–60.Google Scholar
  16. 14.
    Stephen Merrett and Fred Gray, Owner-Occupation in Britain (London and Boston: Routledge & Kegan Paul, 1982).Google Scholar
  17. 15.
    Ibid.; Mark Stephens, “Housing Finance Deregulation: Britain’s Experience,” Netherlands Journal of Housing and the Built Environment 8, no. 2 (June 1993): 159–75, doi:10.1007/BF02496495;CrossRefGoogle Scholar
  18. Mark Stephens, “Mortgage Market Deregulation and Its Consequences,” Housing Studies 22, no. 2 (March 2007): 201–20, doi:10.1080/02673030601132797CrossRefGoogle Scholar
  19. 17.
    Terrence J. Gough and T. W. Taylor, The Building Society Price Cartel, Hobart Paper 83 (London: Institute of Economic Affairs, 1979), 13.Google Scholar
  20. 19.
    Bank of England, “The Clearing Banks’ Collective Agreements,” August 20, 1968.Google Scholar
  21. 20.
    Philip Augar, The Death of Gentlemanly Capitalism: The Rise and Fall of London’s Investment Banks (London: Penguin, 2000); Jonathan Guthrie, “Big Bang Gave London Top Tier Status,” Financial Times, April 8, 2013.Google Scholar
  22. 22.
    Margaret Thatcher, “Speech to Conservative Party Conference” (Winter Gardens, Blackpool, October 10, 1975).Google Scholar
  23. 26.
    Geoffrey Howe, Conflict of Loyalty (London: Pan Books, 1995).Google Scholar
  24. 28.
    John Campbell, The Iron Lady: Margaret Thatcher, from Grocer’s Daughter to Prime Minister (New York: Penguin Books, 2011).Google Scholar
  25. 29.
    Margaret Thatcher, “Speech at Lord Mayor’s Banquet” (Guildhall, November 10, 1979).Google Scholar
  26. 33.
    The Banker, “Decartelisation,” The Banker 131, no. 664 (June 1981), 24.Google Scholar
  27. 35.
    Ralph Stow, Mortgage Finance in the 1980’s: Report of a Working Party under the Chairmanship of Mr. Ralph Stow (London: Building Societies Association, 1979);Google Scholar
  28. The Banker, “Retail Mayhem,” The Banker 133, no. 684 (February 1983): 7–9.Google Scholar
  29. 36.
    Martin Boddy, “Financial Deregulation and UK Housing Finance: Government– Building Society Relations and the Building Societies Act, 1986,” Housing Studies 4, no. 2 (April 1989): 92–104, doi:10.1080/02673038908720647; Stephens, “Housing Finance Deregulation”; Stephens, “Mortgage Market Deregulation and Its Consequences.”CrossRefGoogle Scholar
  30. 39.
    Noah Kofi Karley and Christine Whitehead, “The Mortgage-Backed Securities Market in the UK: Developments Over the Last Few Years,” Housing Finance International 17, no. 2 (December 2002): 31–6.Google Scholar
  31. 40.
    Michael Pryke and Tim Freeman, “Mortgage-Backed Securitization in the United Kingdom: The Background,” Housing Policy Debate 5, no. 3 (1994): 307.CrossRefGoogle Scholar
  32. 44.
    Adair Turner, Andrew Haldane, Paul Woolley, Sushil Wadhwani, Charles Goodhart, Andrew Smithers, and Andrew Large, “The Future of Finance” (London School of Economics, 2010).Google Scholar
  33. 46.
    Eric K. Clemons and Bruce Weber, “London’s Big Bang: A Case Study of Information Technology, Competitive Impact, and Organizational Change,” in Proceedings of the Twenty-Second Annual Hawaii International Conference on the Emerging Technologies and Applications Track (Twenty-Second Annual Hawaii International Conference on the Emerging Technologies and Applications Track, Kailua-Kona, HI: IEEE, 1989), 233–42, vol. 4, doi:10.1109/HICSS.1989.48126.Google Scholar
  34. 47.
    Steven Kent Vogel, Freer Markets, More Rules: Regulatory Reform in Advanced Industrial Countries (Ithaca: Cornell University Press, 1998); BBC News, “Big Bang’s Big Birthday,” October 26, 2006, sec. Business, Scholar
  35. 49.
    Yally Avrahampur, “A Recent History of UK Pension Provision,” in Pension Funds & Their Advisors, 30th ed. (AP Information Services, 2007), Introduction.Google Scholar
  36. 54.
    Group of Ten, “Report on Consolidation in the Financial Sector” (Basel: Bank for International Settlements, 2001), Scholar
  37. 56.
    Barry Riley, “Can the Discount Houses Cope with the Bank’s New Regime?,” The Banker 132, no. 672 (February 1982): 29–33.Google Scholar
  38. 57.
    Richard White, “The Review of Investor Protection. The Gower Report,” Modern Law Review 47, no. 5 (September 1984): 553.CrossRefGoogle Scholar
  39. 58.
    L. C. B. Gower, Review of Investor Protection, Command Papers 9125 (London: HMSO, 1985).Google Scholar
  40. 62.
    Moira Munro, Janet Ford, Chris Leishman, and Noah Kofi Karley, “Lending to Higher Risk Borrowers: Sub-Prime Credit and Sustainable Home Ownership” (York: Joseph Rowntree Foundation, 2005).Google Scholar
  41. 63.
    AMECO, as well as Dorothy Power and Gerald Epstein, “Rentier Incomes and Financial Crises: An Empirical Examination of Trends and Cycles in Some OECD Countries,” Working Papers (Political Economy Research Institute, University of Massachusetts at Amherst, 2003).Google Scholar
  42. 66.
    The 150 percent figure comes from the Bank of England statistics on home equity withdrawals. The more disputable contention that this exceeded overall economic growth comes from Ewald Engelen, Ismail Erturk, Julie Froud, Sukhdev Johal, Adam Leaver, Michael Moran, Adriana Nilsson, and Karel Williams, After the Great Complacence: Financial Crisis and the Politics of Reform (New York: Oxford University Press, 2011).CrossRefGoogle Scholar
  43. 69.
    Margaret Thatcher, “Speech to Conservative Women’s Conference” (The Barbican, London, May 22, 1985).Google Scholar
  44. 77.
    Mervyn King, “Debt Deflation: Theory and Evidence,” European Economic Review 38, nos. 3–4 (April 1994): 419–45, doi:10.1016/0014–2921(94)90083–3CrossRefGoogle Scholar
  45. 86.
    David M. Andrews, “British Accession to the Exchange Rate Mechanism: The Politics of the Strong Currency Option” (European Community Studies Association Annual Conference, Fairfax, VA , 1991).Google Scholar
  46. 87.
    Margaret Thatcher, “House of Commons Statement on the Rome European Council” (Westminster, October 30, 1990); Howe, Conflict of Loyalty.Google Scholar
  47. 90.
    BBC News, “Major Proposes New Euro Currency,” June 20, 1990,;Google Scholar
  48. John Roy Major, John Major: The Autobiography, 1st ed. (New York: HarperCollins Publishers, 1999).Google Scholar
  49. 94.
    Elaine Kempson and Claire Whyley, Kept Out or Opted Out? Understanding and Combating Financial Exclusion (Bristol: Policy Press, 1999).Google Scholar
  50. 103.
    Stephen Driver and Luke Martell, New Labour: Politics after Thatcherism (Malden, MA: Polity Press, 1998).Google Scholar
  51. 111.
    James Naughtie, The Rivals: The Intimate Story of a Political Marriage (London: Fourth Estate, 2002).Google Scholar
  52. 112.
    Opinions differ sharply between Peston and Blair in Robert Peston, Brown’s Britain (London: Short Books, 2005);Google Scholar
  53. Tony Blair, A Journey: My Political Life (New York: Vintage Books, 2011).Google Scholar
  54. 114.
    Gordon Brown, “Speech to the Confederation of British Industry” (London, November 28, 2005).Google Scholar
  55. 115.
    John Flood, “Fool’s Gold: How Unrestrained Greed Corrupted a Dream, Shattered Global Markets, and Unleashed a Catastrophe,” Journal of Law and Society 36, no. 4 (December 2009): 579–84, doi:10.1111/j.1467–6478.2009.00484.x;CrossRefGoogle Scholar
  56. Roland Bénabou, “Groupthink: Collective Delusions in Organizations and Markets,” Working Paper (National Bureau of Economic Research, March 2009).CrossRefGoogle Scholar
  57. 116.
    Alan Greenspan, “Remarks by Chairman Alan Greenspan Before the National Italian American Foundation” (Washington, DC, October 12, 2005).Google Scholar
  58. 117.
    Gordon Brown, “Gordon Brown: Mansion House Speech” (London, June 20, 2007).Google Scholar
  59. 118.
    Gordon Brown, “Gordon Brown: Mansion House Speech” (London, June 17, 2004).Google Scholar
  60. 124.
    Building Societies Commission, “Building Societies Commission Fact Sheet,” February 1999.Google Scholar
  61. 125.
    Parliament (UK), Bank of England Act of 1998, 1998.Google Scholar
  62. 126.
    Michael Taylor, “Redrawing the Regulatory Map: A Proposal for Reform,” Journal of Financial Regulation and Compliance 5, no. 1 (1997): 49–58, doi:10.1108/eb024904CrossRefGoogle Scholar
  63. 127.
    Ibid.; Clive Briault, “The Rationale for a Single National Financial Services Regulator,” Occasional Paper Series (Financial Services Authority, May 1999).Google Scholar
  64. 130.
    Financial Services Authority, Principles-Based Regulation: Focusing on the Outcomes That Matter (London: Financial Services Authority, April 2007), Scholar
  65. 132.
    Ed Balls, “Speech to British Bankers’ Association” (Presented at the British Bankers’ Association annual dinner, London, October 11, 2006).Google Scholar
  66. 133.
    Parliament (UK), “Consumer Credit Act” (London, 2006).Google Scholar
  67. 134.
    Committee on Corporate Governance, “Committee on Corporate Governance: Final Report” (London, January 1998).Google Scholar
  68. 135.
    Alan Greenspan, “Regulation, Innovation, and Wealth Creation” (Presented at the Remarks Before the Society of Business Economists, London, September 25, 2002).Google Scholar
  69. 136.
    For instance, Robert Shiller, The New Financial Order: Risk in the 21st Century (Princeton: Princeton University Press, 2003).Google Scholar
  70. 137.
    Satyajit Das, Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives, Revised Edition (Harlow: Pearson, 2010);Google Scholar
  71. Satyajit Das, Extreme Money: Masters of the Universe and the Cult of Risk (Upper Saddle River: FT Press, 2012).CrossRefGoogle Scholar
  72. 138.
    Paul Taylor, “Securitization in Europe,” in Asset-Backed Securities, ed. Anand K. Bhattacharya and Frank J. Fabozzi (New Hope: Frank J. Fabozzi Associates, 1996), 21–62.Google Scholar
  73. 142.
    Karley and Whitehead, “The Mortgage-Backed Securities Market in the UK”; Rick Watson and Jeremy Carter, Asset Securitisation and Synthetic Structures: Innovations in the European Credit Markets (London: Euromoney Books, 2006).Google Scholar
  74. 146.
    Ross Barrett and John Ewan, “BBA Credit Derivatives Report” (British Bankers Association, 2006).Google Scholar
  75. 157.
    National Audit Office, “Report by the Comptroller and Auditor General” (HM Treasury, December 2010); Emma Rowley, “Bank Bail-out Adds —1.5 Trillion to Debt,” The Telegraph, January 16, 2011.Google Scholar
  76. 165.
    High Pay Commission, “Cheques with Balances: Why Tackling High Pay Is in the National Interest” (The High Pay Commission, November 2011).Google Scholar
  77. 166.
    Will Hutton, “Hutton Review of Fair Pay in the Public Sector: Final Report” (London: HM Treasury, March 2011).Google Scholar
  78. 167.
    Bob Pannell and Caroline Purdey, “Measuring Attitudes to Home-Ownership” (UK Council of Mortgage Lenders, 2012).Google Scholar
  79. 172.
    NAPF, “Investment Insight: Equities vs. Bonds?” (National Association of Pension Funds, May 2013).Google Scholar

Copyright information

© Gregory W. Fuller 2016

Authors and Affiliations

  • Gregory W. Fuller

There are no affiliations available

Personalised recommendations