UK Mandelson: Economy Has Relied Too Much On Financial Services

LONDON -- The U.K. economy has relied too heavily on financial services and failed to develop alternative generators of rapid growth, Secretary of State for Business, Innovation and Skills Peter Mandelson said Monday.

Mandelson was speaking to the BBC during the annual conference of the ruling Labour Party, which is set to sharply increase regulation of the banking sector, having championed the industry as a source of dynamism since it came to power in 1997.

"We relied too much on financial services," Mandelson said. "We should have been nurturing different bases in our economies."

Mandelson defended the government's record in regulating the banking sector, and particularly the decision to create the Financial Services Authority, which concentrated powers previously distributed across a variety of different agencies, including the Bank of England.

"It's not that it didn't work," Mandelson said. "It should have been more intrusive, should have imposed its will on more banking practices, on banking bonuses. We did the right thing, but we could have supplied the solutions in a tougher way."