7 - Finance

Summary

Finance figured prominently in the left's case against continued British EU membership. Critics on the left argued that the EU played a central role in the financialization of the political economy of Europe, concentrating the power of transnational financial capital at the expense of manufacturing industries, workers and left behind communities (Bieling 2013). Such critiques intensified following the 2007–8 GFC. In that context, those on the British and European left who had embraced many aspects of a market Europe (Chapter 1), including rapid financialization, were forced into a period of soul searching. Many on the contemporary left argued that the GFC and subsequent eurozone crisis exposed the unstable, inequitable and unsustainable nature of the financialized global and European political economy. For Lexiteers (Chapter 2), and some critics elsewhere in Europe, leaving the EU represented the only viable way of meaningfully tackling these issues. Lexiteers in the UK regarded Brexit, then, as a unique opportunity to rebalance the British economy away from the City of London and to rebuild manufacturing industries, increase the power of workers and debtors, and spur public investment to revitalize underdeveloped regions.

Of the policy areas under discussion in this book, we would contend that finance is the one where the Lexiteer critique has the greatest purchase. The GFC and its aftermath exposed the many perils of Britain's disproportionately large financial sector. This “finance curse” has generated slower growth and productivity, reduced economic diversity and led to economic instability and relentlessly widening inequalities (Christensen et al. 2016; Baker et al. 2019). However, as should be clear (see Chapter 3), we are firmly on the side of those who regard transnational, including EU, action as a fundamental part of realistically tackling these very real issues. Brexit is, from this perspective, a hindrance for progressives who seek radical reform of the financial and economic system. The most viable means of avoiding an ever more hyper-financialized and loosely regulated post-Brexit economy, we argue, is to engage with the reformed social Europe agenda we outline in Chapter 3, and have reiterated in the other policy chapters, which offers creative and coordinated alternatives to dependence on private finance.