Barclays is to shed around 14,000 jobs in 2014, we learnt last week, more than half of them in the UK. These head-count cuts are largely about the on-going process of humdrum branch closures – not only in Britain, but also in Spain, Italy, Portugal and France. Such job losses are sadly inevitable, given the rise of mobile and on-line banking.
This Barclays announcement, though, was spun rather differently. Rather than discussions about banks’ reduced presence on the High Street, our airwaves were instead filled with tales of Barclays’ “courage”, as it distanced itself from “casino banking” in a “decisive break with the past”.
Some 2,000 of this year’s job cuts are in Barclays’ 26,000-strong investment banking division. More such posts are to go, the bank tells us, in 2015 and 2016.
The European Central Bank took no decisive action last Thursday either to lower Eurozone interest rates or launch its own programme of “quantitative easing”. It was made clear, though, that the ECB may soon follow the US Federal Reserve and Bank of England by firing up Frankfurt’s virtual printing press and creating, ex nihilo, hundreds of billions of euros.
The council was “unanimous”, said ECB boss Mario Draghi, a hint of steel entering his voice, in its commitment to “unconventional instruments”. In case that wasn’t crystal, he spelt it out. “All instruments within our mandate are part of this statement,” he told the world. “There was, in fact, during the discussion we had today, a discussion of QE”.
This coming Wednesday, the House of Lords debates the second reading of the government’s banking reform bill. Now we’re in the holiday season, and the sun is shining, the prospect of an ermined discussion about bank regulation may strike you as deadly dull. But you’d be wrong.
This draft legislation forms the centre-piece of the UK’s response to the sub-prime collapse, the related banking meltdown and the resulting economic damage meted-out to millions of British workers. It’s unfortunate that such vital measures are being considered by the Upper House only at the fag-end of the Parliamentary year, when the Commons has already risen and media scrutiny of Westminster is on go-slow.
For all the fanfare of hosting this week’s G8 summit, the UK remains locked in a dire economic predicament. For all our gloating at the Eurozone, Britain’s national income is still well below its 2008 peak.
Other “leading” Western economies are performing much better. While Germany and the US are also yet to stage a truly convincing recovery, the GDP of both is now well above pre-crisis levels. Yet the UK’s nominal GDP remains 4pc below where it was at the time of the 2008 Lehman collapse.
Finally, the British political classes are starting to get it. Finally, a head of steam is building. Over the last week, calls to impose a proper division between investment and commercial banking have become louder, more authoritative and part of mainstream debate. Pressure for the introduction – or re-introduction – of this crucial split could soon become irresistible, however much the politicians wiggle and the investment bankers deceive.
Until now, it’s been mainly nerds like me who’ve advocated a full Glass-Steagall separation. Given the vested interests that would lose from this change, we’ve been lampooned for our “hot-headed” views. Yes – our message is awkward. Life would become difficult (and less lucrative) for a lot of powerful people, were we to prevail. Yet we “Glass-Steagallers” are right. We have history, logic and common sense on our side. And now – thanks to Barclays ex-CEO Bob Diamond, and “Liborgate” – we also have political momentum.