ABSTRACT
"New Labour" embraced neoliberalism, whilst claiming it to be a "Third Way", which is a nebulous concept that never did crystallise into anything recognisably unique. The 1970s had witnessed initial steps towards financial liberalisation with the switch from direct to indirect controls on bank lending under Competition and Credit Control in 1971. Thatcher, who blamed both excessive regulation and the "old boy's network" for this lack of competitiveness, opted for fundamental change. Following Thatcher's replacement by the rather less authoritative John Major, a process of gradual modernisation had begun under the latest Labour leader, John Smith. The 2000 Financial Services and Markets Act created the Financial Services Authority (FSA) as a single, unified regulator for financial services, with responsibility for banking supervision and the regulation of investment services, securities, mortgages and insurance. The deep recession of the early 1990s was followed by a prolonged expansion and reduced macroeconomic volatility, described as the "Great Moderation".
