[Kizzy]

Financial crisis not caused by Labour over-spending, says top Treasury official

Patrick Wintour Patrick Wintour
Sir Nicholas Macpherson, the permanent secretary to the Treasury, has argued that the 2008 financial crisis was “a banking crisis pure and simple”, contradicting Conservative claims that it was caused by Labour over-spending, Patrick Wintour reports.

[Macpherson’s] surprising remarks come after Ed Miliband came under pressure on a leader’s question time debate last week that Labour government had overspent, a view strengthened by the notorious letter left by the former Liam Byrne treasury chief secretary to his successor saying there is “no money left”.

In a largely challenging review of Mr Osborne’s Economic Experiment, a book by William Keegan, the Observer economics columnist, Macpherson wrote “some of Keegan’s book resonates. The 2008 crisis was a banking crisis pure and simple. Excessive risk had built up in the system; the regulators failed to appreciate the scale of that risk or to address it.

“As he puts it, it was ‘a failure of the Group of Seven economic policymaking establishment’, myself included. Inevitably, countries with bigger banking sectors, notably the UK, were worse affected.”

http://www.theguardian.com/politics/...b0fc4f1b18c06b