The proposal to break up Britain's banks was launched this morning by Ed Miliband to a distinctly cool reception from all but a few die hard Labour supporters, the traditional backers of state intervention and nationalisation.
Chukka Umunna bravely tried to defend the move on Radio 4 but wasn't at all convincing. The need to get more credit to small business is largely solved and the recovery reinforces this view.
Mark Carney, of the Bank of England, Anthony Browne of the BBA and John Cridland of the CBI, plus a whole string of city analysts, all agree this move will do nothing to enhance competition in banking. I explain why in this post.
What this move could do is stymie the return of Lloyds and RBS to the private sector, and what it will do is encourage the likes of HSBC to invest in Asia and not Britain. That will cost the taxpayer money, as Lloyds and RBS are mostly state owned, and it will hurt jobs.
Why would Ed Miliband advance such a proposal? It seems at best economically inept, at worst it could be an example of acting for short term political advantage, and against the best long term interests of the country.
After all, if two of the five banks are largely state owned this could stop a return to the private sector in its tracks. Who would buy shares in an institution that could be 15 months away from a value destroying break up. This would be bad for the tax payer as on current trends a planned £7bn repayment had been mooted for Lloyds. Without this realisation of value the deficit repayment plan will be undermined, and Chancellor Osborne's plans with it.
Whichever it is, poor economic judgement or tactical electioneering, neither reflects well on Mr Miliband.