Banks, the euro and well done Gordon

The Government's response to the banking commission report was about as good as I could have hoped for, but also as bad as I feared, i.e. it was accepted with little reservation which is excellent, but bad in view of the huge delay in implementation. Eight years is a ridiculously long time to wait - easily long enough for there to be a further banking crisis, though the new international 7% reserve assets requirement does help in the meantime.

I heard presentations yesterday at the Ham and Hi Festival in Hampstead by Stephanie Flanders (BBC) and Stephen King, former chief economist with HSBC. Both were pessimistic about the prospects for the euro and were all but predicting defaults by Greece and Portugal and probably two or more countries leaving the zone. Both also said how relieving it was that the UK is not in the eurozone.

Now Conservatives must obviously pat themselves on the back that we retained sterling. However, it is Gordon Brown I congratulate most heartily. Why ? Because he was not ideologically opposed to the euro but understood the timing was wrong. He also had to hold out against the euro-enthusiasts in Labour, not least Blair himself. Conservative opposition to a single currency was easy, but for Gordon it was a tough road to take. One shouldn't overdo this, as Brown didn't see the credit crunch coming, but he did understand the British economy was not in good enough shape to join.

Schadenfreude is to be avoided just now. We won't escape the fallout that Flanders and King were predicting.