While climate change and the sleaze may have made headlines over recent weeks, we still have good news.
The City of London is defying the doomsayers and concerted efforts of Paris, Frankfurt and Amsterdam to wrestle away its role as Europe’s — and much of the rest of the world’s — financial centre.
As Boris Johnson’s government plans to replace the restrictive Brussels laws that are limiting our ability to innovate and change the rules, everything is going well for the financial community.
It seems that this is already paying off well. Last night’s Prime Minister’s Mansion House Speech, where he celebrated what many observers call Big Bang II, was timed to coincide with an announcement from Royal Dutch Shell, one of the largest companies in the world.
The financial sector is growing as Boris Johnson’s government (pictured) announces plans to change restrictive Brussels laws by a more flexible and innovative system, writes Alex Brummer
Battle
Shell follows the Unilever model and gives up its dual nationality. Shell plans to unify the stock-market quotation, headquarters, and London domicile, free from interferences by the Dutch courts. Investors will also be protected from an unfair tax structure.
America’s Fortune magazine declared the victory of the City in the fiercely fought race to make it the hub in 2021 for the public offering shares in new technologies.
While the London Stock Exchange might still have some way to go in catching Wall Street, it collectively is leaving its Continental counterparts behind post-Brexit.
As a British citizen, I felt it was unfair that Tories spent too much time worrying over agriculture which only 0.6% of our national output. They also focused too much on the financial sector, which has more than 1.2million people.
This is in addition to professional services such as legal and accounting. It’s the biggest tax payer of all.
To the consternation of many of its grandees — including the Governor of the Bank of England Andrew Bailey (pictured) — the City looked to have been left to sink or swim
To the consternation of many of its grandees — including the Governor of the Bank of England Andrew Bailey — the City looked to have been left to sink or swim.
The fear was that substantial amounts of the foreign exchange and derivatives trading conducted in London, an astonishing $3.6 trillion (£2.6 trillion) per day representing 45 per cent of all the transactions worldwide, would vanish overseas.
Although there were some leakages to New York initially, President Emmanuel Macron’s attempts to attract some of these businessmen to Paris, which includes the major global investment banks, has failed spectacularly.
While Westminster was focused on the earnings of Geoffrey Cox as former attorney general, last week it almost went unnoticed when Brussels in fact raised the white flag regarding derivatives trading.
Instead of removing the regulatory ‘equivalence’ temporarily granted until the middle of next year for reasons of stability — meaning the EU would recognise UK regulators — Brussels has now extended it indefinitely.
While Westminster was focused on the earnings of Geoffrey Cox, the former attorney general (pictured), the fact that Brussels successfully ran the white flag in derivatives trading went virtually unnoticed
In other words, one of the City’s greatest sources of income — and the reason Canary Wharf’s towers are filling up again post-Covid — looks to have been secured.
Despite my concerns above, I always believed the Square Mile would triumph.
It was a banking, trading and insurance hub that survived the Great Fire of London. World War I saw trading slow down. The disastrous 1925 return to gold led to deep recession.
It bounced back stronger in the 1970s and 1960s after some injudicious U.S. tax on bond trading overseas, which brought all of that business to London. Margaret Thatcher’s “Big Bang” deregulation in 1986 brought about the end of regulation for the stock market.
Boris Johnson and Rishi Sunak, the Chancellor of India are clearly determined to continue in that vein. And it seems like the City is keeping their faith.
Boris Johnson (pictured) and Rishi Sunak, Chancellor of India, are clearly determined to continue in this vein. The City appears to have faith
This is a far cry from the pre-Brexit days where there were plenty of warnings about how our EU withdrawal would affect the City.
In a widely distributed report by Oliver Wyman consultants, they predicted that 75,000 jobs in financial services would move from London to the Continental financial centers.
Goldman Sachs’ senior executives waxed romantic about key financial teams moving to Frankfurt at a private dinner.
Yet the Financial Services Jobs Tracker run by accounting firm EY (formerly Ernst & Young) shows that to date only some 7,600 jobs — one-tenth of the predicted loss — have moved to Europe.
There has also been an increase in the number of financial jobs. Professional recruitment agencies have reported record levels of tech job vacancies in Britain.
Expansion
Furthermore, many of the same companies who warned against major EU moves are actually increasing their European commitment.
Goldman Sachs recently opened a European Headquarters for its 6,500 London staff.
The financial information giant Bloomberg — its founder Michael Bloomberg was among the big U.S. critics of Brexit — has its new ‘green’ European headquarters here, too, for its expanding army of 4,500 analysts and reporters.
There have been many setbacks, but that’s not to suggest there weren’t. It is often noted that the custody of £1.3 trillion of funds under management in London switched to European centres such as Luxembourg and Dublin as Britain headed for Brexit.
The financial information giant Bloomberg — its founder Michael Bloomberg (pictured) was among the big U.S. critics of Brexit — has its new ‘green’ European headquarters here, too, for its expanding army of 4,500 analysts and reporters (file image)
It is unclear why, but legal reasons have led to the money, small groups of administrators, and their staff, to move to European centres. However, those who manage and deal with shares, bonds, and other assets remain in London.
Similarly, it was a great moment when the pro-remain FT announced that most trading of euro-denominated shares moved from London to Amsterdam shortly after Brexit.
Although this was an obvious loss, the Turquoise platform was used for most complex trades. This is a professional investor trading platform that is operated and owned by the London Stock Exchange.
Nurture
Boris Johnson realized that the country’s future prosperity depends on supporting the City reforms proposed by Chancellor Sunak, in which Bank of England (and the Financial Services Authority) will have the ability to create their own rules and not follow those of the EU.
It is our goal to modernize so that the financial industry can adopt the green agenda as well as the advancement of financial technology.
However, it is important to note that there will be concerns if rules are relaxed too much and if there is a return of the “light touch” approach many blamed for 2008-09’s financial crisis.
However, at a time where the nation’s finances have been severely stretched since the collapse of Covid, the government recognizes how crucial it is for financial services to be nurtured.
Pre-Covid, the tax revenues of the Square Mile reached a remarkable £75.5 billion, or 10.5 per cent of the total tax receipts of the whole economy — a sum equal to 3.5 per cent of total output.
This makes it seem that the fears about Brexit causing a drop in revenues are exaggerated.
Trading is dominated by the Anglo-Saxon culture and native Anglo-Saxon. Much of this cultural heritage rests in the hands dealers who have been able to learn from the East London street markets. It will last long.