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Should'a put a ring-fence on it

We shouldn't pursue growth at the expense of stability.

Brussels, namely European commissioner in charge of regulatory reform of the region’s banks, Michel Barnier, has continued his policy of banking reform by confusion in choosing to ignore the foremost point of the report commissioned by the EU last year.

In an interview with the Financial Times on 29 January, Barnier argued that if and when any recommendations of the 2012 Liikanen report were to be employed they must not “penalise banks when they work for the benefit of the economy and industry.”

Barnier is concerned that if measures put forward in the Liikanen report are put in place and European banks do not have access to the considerable funds deposited in their coffers by retail customers, growth of the economy will suffer as a result.

The Liikanen report borrowed many ideas from the 2011 UK’s Vickers Report. Most notably regarding the strict ring-fencing of banks trading activities. This was expanded on by UK Parliamentary Committee on Banking Standards which advised the “electrification” of that ring fence.

Many have been sceptical whether or not the measures outlined in the report could be effectively implemented, with one commentator suggesting bankers would not take the rule seriously and likened it to young boys pissing on an electric fence to see who got shocked first.

While this may be true it should be noted that even though the rules may be mocked, like an electric fence the deterrent may be enough to prevent too many excursions into the fenced off area. Enough at least to lessen the blow of another 2008-esq crisis.

Growth is good, that cannot be denied. The EU should not forget the lessons of the past: growth shouldn’t be sought at the expense of stability.

Billy Bambrough writes for Retail Banker International at VRL financial news.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.