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Rachel Reeves must be really desperate if she’s resorting to a claim that we’ll all benefit from something her own boss, prime minister Keir Starmer, called out as a “piss take”.

Labour’s Chancellor Rachel Reeves has unveiled a bold [ha ha!] plan to “cut red tape” in the City of London — the heart of Britain’s financial services sector.

Her argument: that deregulating financial firms will unleash growth and prosperity across the entire UK economy, ultimately delivering “trickle-down benefits” to every household.

But this approach is deeply flawed.

History shows us, painfully, that deregulating finance rarely benefits ordinary people.

Instead, it sets the stage for reckless risk-taking by banks and investors, financial instability, and, ultimately, economic crises that hurt working families the most.

The 2008 crash and the long recession that followed were caused in large part by a financial system let loose from meaningful regulation.

Rachel Reeves’s “Leeds reforms” risk repeating this catastrophic mistake.

It’s not just irresponsible — it’s an utter failure to learn from one of the most damaging economic episodes in recent memory.

What Reeves is doing: cutting red tape to boost the city

The “Leeds reforms,” due to be announced in full this week, are actually intended to roll back the financial regulations that were introduced after the 2008 crash to rein in the excesses of the banking sector. These include:

• Reducing corporate transparency rules: Companies listing on the London Stock Exchange will only need to publish financial prospectuses three days before going public, rather than six. Current listed companies will have to issue fresh prospectuses only if selling more than 75 per cent of equity, up from 20 per cent.

• Loosening mortgage lending rules: The Bank of England has relaxed its affordability checks, allowing lenders to offer bigger mortgages relative to income, potentially helping 36,000 more first-time buyers annually.

• Easing the “senior managers regime”: The regime holds bank executives personally responsible for misconduct and risk-taking. The reforms aim to speed up changes here, though it’s unclear whether this means strengthening or weakening accountability.

• Other unspecified cuts to “burdensome” regulation designed to encourage City firms to invest and grow.

Reeves insists these reforms will “unleash UK growth” and deliver benefits that “ripple” through the economy, from investment to jobs to better pay for working people.

She has placed financial services “at the heart of the government’s growth mission,” making it clear that she views the City as key to Labour’s economic strategy.

The problem with “trickle-down” financial deregulation

Reeves’s framing echoes decades-old “trickle-down economics” — the idea that if the wealthy and corporations prosper, their wealth will eventually flow down to everyone else in the form of jobs, higher wages, and affordable goods.

Yet real-world experience shows trickle-down economics doesn’t work.

When the financial sector is deregulated, what actually happens is:

• Banks and financial firms chase higher profits through risky activities rather than funding real economic growth.

• Complex financial products and excessive leverage (borrowing) build up, increasing systemic risk.

• When risks materialise, crashes occur — wiping out savings, jobs, and government budgets.

• Governments often end up bailing out banks with public money, saddling taxpayers with debt while failing to deliver broad economic benefits.

• Wealth becomes more concentrated as financial elites profit disproportionately, while working families face austerity, job insecurity, and rising inequality.

Starmer’s take on trickle-down: a choice quote

It’s worth recalling Labour leader Keir Starmer’s blunt dismissal of trickle-down economics.

Speaking at Labour’s 2022 conference in Liverpool, Starmer called trickle-down economics a “piss-take”.

His words captured widespread frustration with an idea that has long failed to deliver for working people and instead widened inequality.

That candid critique from the party leader starkly contrasts with Reeves’s embrace of deregulation under the guise of “trickle-down benefits.”

Lessons from 2008: deregulation didn’t deliver for working people

The 2008 financial crisis was not some unforeseeable accident — it was the product of decades of deregulation and complacency.

In the years leading up to the crash:

• The Labour government under Tony Blair and Gordon Brown oversaw a wave of deregulation. Key rules on bank capital reserves, lending standards, and transparency were weakened or not enforced.

• Banks grew larger and riskier, engaging in high-stakes lending, including subprime mortgages in the US, and complex derivatives trading.

• Regulators failed to hold bank executives accountable for excessive risk-taking.

When the bubble burst, it triggered a global financial meltdown and recession, which led to:

• Massive job losses and wage stagnation for millions of working people.

• A huge bailout of banks using taxpayer money — costing the UK government £800 billion.

• Nearly two decades (so far) of austerity policies, cutting public services and welfare, disproportionately hitting ordinary people.

• A loss of trust in both politicians and the financial sector.

This was the ultimate “trickle-down” failure.

The wealthy few got bailed out; the many were left to bear the economic pain.

Why Rachel Reeves’s reforms risk repeating the past

Despite the 2008 experience, Reeves’s reforms seek to ease the very rules designed to prevent another crash.

Cutting transparency rules means less scrutiny of firms raising money on the stock market. This can encourage riskier behaviour and leaves investors — including everyday people — in the dark.

Loosening mortgage lending criteria may temporarily help some first-time buyers, but it risks pushing up house prices further, making homes even less affordable overall. It also means households take on larger debts, which can become unsustainable if interest rates rise or incomes fall.

Easing accountability for senior bank managers may embolden reckless decisions, undoing progress made since the crash to hold executives personally liable.

Together, these changes prioritise the City’s short-term growth over the long-term stability of the UK economy.

Critics warn of the costs: more crises, more inequality

Economists and campaigners have been quick to point out the risks.

• Chaitanya Kumar of the New Economics Foundation calls this “groundhog day,” warning that deregulation risks another crash and recession.

• Jesse Griffiths of the Finance Innovation Lab says the City’s push for deregulation “simply has not worked” for the UK economy and could derail vital industrial and green transition strategies.

• Sara Hall of Positive Money warns that loosening mortgage rules risks saddling households with unmanageable debt and inflating house prices, rather than tackling the root causes of unaffordability.

What Rachel Reeves could do instead: a real plan for growth and fairness

If Reeves is serious about growth that works for everyone, she needs to abandon trickle-down fantasies and focus on reforms that:

• Fund the green transition: Direct finance to renewable energy, energy efficiency, and sustainable infrastructure projects that will create millions of good jobs and cut household bills.

• Support small and medium-sized businesses: Ensure that finance is available to innovative UK companies, not just global banks and hedge funds.

• Strengthen financial regulation: Make bank executives accountable, improve transparency, and prevent the reckless risk-taking that leads to crises.

• Tackle housing affordability at its roots: Invest in building affordable homes and regulate the buy-to-let market, rather than encouraging riskier borrowing.

• Promote financial inclusion: Make credit accessible and fair to working people, not just the wealthy few.

• Reform corporate governance: Encourage companies to focus on long-term social and environmental outcomes, not just short-term shareholder profits.

Such an approach would help build a resilient economy that truly benefits working families — without repeating the mistakes that led to 2008.

What you can do: demand a better future

If you’re tired of watching politicians gamble with your future on deregulation schemes that benefit the wealthy few, make your voice heard:

• Contact your MP: Ask them to reject deregulation that risks another financial crash and support policies that invest in green jobs and housing. Go to TheyWorkForYou.com if you don’t know how to get in touch.

• Support campaign groups: Organisations like Positive Money and the Finance Innovation Lab work to promote fairer financial systems — consider donating or volunteering.

• Stay informed and spread the word: Share articles and facts about why trickle-down economics fails and what alternatives exist.

Together, we can hold politicians accountable and push for an economy that serves everyone — not just the City.

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