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Could the UK banking sector tip into terminal decline?

The head of the British Bankers Association (BBA), chief executive Angela Knight, has suggested that the UK banking sector could tip into a similar decline seen in the steel and shipbuilding industries. Unless the UK government and UK regulators "go easy" on the sector in the medium to longer term there is the potential, in the eyes of the BBA, for the sector to tip into a very difficult and long-term decline. But is this really possible?

The truth is that the UK financial sector, although under pressure at the moment and seen as the devil incarnate by many, is the centre of the UK economy. If the financial industry was to continue struggling and indeed turned back towards a recessionary period then there is no way that the UK economy could push ahead and grow. Such is our dependence upon the financial sector, both personally, for business and for investment that a permanent decline in the sector would be a very difficult scenario to say the least for the UK government and UK regulators.

The last few days have seen various comments from various different parties with different axes to grind giving very different impressions about the future of the UK financial sector. The truth is, at some point the UK government will need to reduce the tax burden on the sector and indeed the regulatory framework will at some stage in the future be loosened. End of story......

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