As we approach the 30-year anniversary of the biggest change to the City possibly in over 100 years, we can ask: was it a good, or a bad thing?
It was 27 October 1986, and all changed in the City. Before that date, things were done the way they had always been done. Stock brokers bought and sold shares, jobbers were the market makers, they were the people that brokers often sold to, or bought from. Jobbers held shares, and created liquidity. After Big Bang, the two roles merged.
That was just one of the differences that occurred that day – another was a physical change in the stock market itself, the buying and selling of shares in the dealing room went, instead men and women sat by decks on the phone and behind computer screens buying and selling.
The Big Bang meant massive deregulation of the markets, it’s purpose was to try and reverse years of decline at the City when it had lost its status as the world’s premier financial hub.
Arguably, it is a status that has now been regained.
But 30 years on, we can ask, Big Bang – good or bad?
Frankly it may be a silly question – we might as well ask if that other Big Bang was a good or bad thing. In 1986 the world was changing and the City had to be ahead of the change.
But some say that the deregulation of the City created a Pandora’s box of ills. Nigel Lawson, chancellor at that time suggested that the 2007/08 crisis was an unexpected consequence of Big Bang.
And let’s face it, bankers are not very popular these days – maybe you can back-date bankers greed and all that entailed to October 1996.
And while Big Bang was a key part of Margaret Thatcher’s reforms of that time, many say that it was those reforms that led to the issues of rising inequality in the West and social discontent that is asserting itself today.
But then, progress is progress and technology changes. There are always disadvantages to change and without the Big Bang, London would not be the city it is today.
Many resent London’s success, but truth is, it is essential to the UK economy, and it may even be that the rise of tech entrepreneurs in pockets of London, right next door to the City’s money machine, is no coincidence. London’s success has made Tech City possible.
But what London’s success has also done is create this incredible infrastructure, a pool of skilled labour, a support network and a huge variety of entertainment.
Right now, in this post Brexit vote era, London faces its biggest threat in a long time. If it was not for the reforms of 1986 it would have no chance at all of maintaining its position as the world’s premier financial centre. According to Greek mythology, at the bottom of Pandora’s box, beneath all the ills of the world, was hope, and maybe Big Bang ultimately created the hope that the City can shake off the threats to its hegemony posed by Brexit.
For a counter view, see Are banks really set to leave these shores?
