Despite Reeves's dramatic language, UK bank ringfencing does not need major reform

One reason to worry about the chancellor's plan for deregulation in the financial services sector is the dramatic language in which she pitched it.

- Nils Pratley

Rachel Reeves's metaphor in her Mansion House speech last month about regulation in too many areas acting as "a boot on the neck of business" felt wildly over the top when you remember why tougher rules were needed in the banking sector in the first place. It was because the light-touch regulatory era caused the whole economy to be clobbered in the collapses of 2008-09.

In the event, it took until 2019 to implement fully the centrepiece of the clean-up operation: bank ringfencing, which requires UK banks of a certain size to separate retail and investment banking activities. Now, just six years later, the Treasury, lobbied by most of the big banks, is contemplating "meaningful" changes to ringfencing in the interests of growth. It feels far too soon to try anything radical. The definition of "meaningful" is vague. Outright abolition of ringfencing is off the table, thankfully, and some of the possibilities floated by the Treasury could be viewed as innocuous.