We can't rely on the City for growth, says Mandelson
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The financial services sector should not be at the heart of future economic growth in the UK, according to business secretary Lord Mandelson.
In a speech delivered today in London, Mandelson argued that over the last 10 years the UK became “over-dependent on the City and financial services for growth and our tax revenues.”
He says: “That is why, without wishing the financial sector to be smaller, we need other industrial strengths and sources of revenue to grow faster.
“Finance will have to change – the insurance bill for saving the economy from the status quo was far too steep and it can never happen again.
“While putting the City in an iron cage of regulation is undesirable, just relying on a bit of nudge here and there will not suffice.”
Mandelson also sought to address some of the concerns expressed by businesses over tax increases such as the 50% threshold for income tax for those earning over £150,000 a year.
The government also caused a stir last month when it revealed its plans to tax bonus payments.
Mandelson says: “It is right that in taking the tough decisions on tax needed to combat the deficit those with the broadest shoulders will bear the greatest burden.
“I believe we have got this balance right.
“But as a government we will always be vigilant that this burden does not become so great that it damages our long-term competitiveness or inhibits those whose efforts will help us build sustainable growth.”
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