The Role of the State in the Financialisation of the UK Economy

Abstract

This article looks at the role of UK governments in the financialisation of the British economy and its industry. It argues two things. First, the UK state has had a rather more active role here than most observers have acknowledged. Successive governments since the 1970s have not merely abandoned industry, they have handed much of its control to the financial sector. Second, a key part of this policy shift was linked to the rising power of the Treasury and its reshaping of the former Department of Trade and Industry in its own ideal economic policy image. This both boosted the City and disadvantaged industry, thus propelling the UK towards financialisation at a faster pace than almost all rival economies. The arguments are based on evidence from a mix of interviews with central actors, published insider accounts and an analysis of budget statements in the period 1976–2010.