U.K. banks, insurers and professional services should stop “self-imposed flagellation” and spur the country back to growth, according to Peter Levene, chairman of the Lloyd’s of London insurance market.
“The British economy needs to be on a quest for growth,” Levene, 69, said at Lloyd’s annual dinner in London today. “That search should begin here, in this square mile of banks, insurers, accountants and all the manifold businesses, which together make up the financial services industry.”
The U.K. economy has stagnated after rebounding from the worst recession in a generation, expanding 0.2 percent in the second quarter as consumer and business confidence dropped amid the European debt crisis and inflation. Even though the banks nearly collapsed in 2008, causing the rout, the financial-services industry is still the best hope of returning the country to growth, Levene said.
Bailing out lenders including Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc prompted the government to impose a tax on bank profits and lawmakers are currently investigating ways of raising capital reserves and implementing firebreaks around banks’ consumer divisions.
“We happen in this country to be world leaders in the finance sector, so let us now get it right, return to respectability and stop bashing ourselves on the head,” said Levene, who was speaking at his last Lloyd’s annual dinner before he steps down as chairman next month. “This self-imposed flagellation just has to stop.”
Banking, insurance and professional services are primed to become the focal point of the recovery, Levene said, citing data from the Office for National Statistics that showed output from the industry grew by 20 billion pounds ($32.2 billion) in the last five years.
During that time, the government was forced to bail out banks at a cost of about 1 trillion pounds in capital and government guarantees.
Chancellor George Osborne, who also spoke at the dinner, has made cutting the country’s budget deficit his main target since taking office last year. Reducing borrowing costs is the best way of boosting long-term growth, he has said.
“Every question facing British society, politics and economics comes down to achieving competitive and sustainable growth,” Levene said. “Making money which will cut deficits, create jobs and fund public services, not least the growing pensions bill.”
Levene last year founded NBNK Investments Plc, a fund which seeks to acquire banking assets and create a new consumer lender. The company is in talks to buy National Australia Bank Ltd.’s U.K. units, a person with knowledge of the situation said today.
John Nelson, chairman of property firm Hammerson Plc and a former Credit Suisse AG banker, will replace Levene as chairman of Lloyd’s, the world’s oldest insurance market, next month.