Having served as minister for everything from Social Security to Transport to Trade and Industry since 1998, Alistair Darling has developed a reputation as a dependable workhorse for the Labour government. Since succeeding Gordon Brown as Chancellor of the Exchequer in June 2007, Darling has had to put all of his political skills and energy into salvaging Britain’s crisis-hit financial sector and combatting a devastating recession. In an interview last month with London Bureau Chief Loch Adamson in his spacious Treasury chambers, Darling explained why a tough new regulatory approach is needed to restore the fortunes of the City of London.
Institutional Investor: The International Monetary Fund has expressed concerns about the U.K.’s indebtedness and the prospect of a slow, jobless recovery. How is the country going to dig its way out of the morass?
Darling: It is essential that we and other countries support our economies just now, because if you don’t do that, you run the severe risk of a crash, plunging the economy into a much deeper — and far more painful — recession. But as a recovery becomes established, then all countries will have to make sure that they take steps to reduce their borrowing and their debt levels. You have to do that in a way that is fair to people and doesn’t damage businesses — and doesn’t put at risk the recovery itself. What the IMF made very clear [last month] is that the job isn’t done yet. What ....