ABSTRACT
According to commentators such as Paul Krugman, the crisis was primarily the result of a policy of financial deregulation dating back to the 1980s. Focusing on the post-war British banks, S. G. Warburg & Co., this chapter shows how its numerous contributions to the revival of the City of London as a financial centre were essentially set at nought by crass errors perpetrated by government. The average real return was responsible for the first hostile takeover in post-war City history, dominating the UK mergers and acquisitions business for the better part of the next thirty years. The Heath government was committed to financial deregulation. The Heath government sentenced itself to electoral defeat in November 1972, when it was driven to revive the Labour policy of wage control. One might therefore have expected the Thatcher government's policies to have enjoyed the wholehearted support of the City of London.
