Yesterday, Downing Street was keen to take the credit for the Lloyd’s HBOS deal. But Brown is playing a dangerous game. First of all, there is the issue highlighted by Alphaville of whether there has been tinkering with the deal to make sure that Edinburgh remains a major UK financial centre. It also appears that someone has leaned on Lloyds not to make the maximum efficiency savings.
Then, there is the question of what Brown is doing apparently telling Lloyds to lend in the way that HBOS did. The FT’s Westminster blog reports Brown as saying, “We’ve also insisted on assurances from the new company [Lloyds/HBOS] about their mortgage lending in the market place so they will not reduce it.” Now, as the FT points out, Lloyds was in a position to step in because it had been more cautious, so Brown’s comments suggest he doesn’t realise what the problem was.
By trying to take the credit for the deal, Brown has ensured that he’ll cop the blame if anything goes wrong—for example, Europe stepping in to block the deal on competition grounds. Once again, Brown has created a potentially serious political problem for himself for the sake of a short-lived, short-term advantage.
Update: Iain Martin has an important post over at Three Line Whip on how Brown and Darling’s desire to protect various of the more dignified functions of the Bank of Scotland might have been part of their Glenrothes by-election strategy.
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