The City of London’s Potential Growth Opportunity Outside of the EU
Today, she looks at the city’s potential for growth outside of the EU as a part of what the British government calls Global Britain.
They also appear in the U.K. Treasury’s publication of the U.K.’s approach to equivalence that came out in November 2020. Again, a recurring theme was that London would be internationally focused and open.
这些主题也出现在Jonathan Hill审查中City’s regulatory framework, which was published recently. What the U.K. government appears to be looking at is regulatory flexibility, while also trying to emphasize that it wants to maintain regulatory high standards. It doesn’t want to be seen as engaged in a regulatory race to the bottom.
That being said, geography still matters in trade.
Particularly in financial services. It’s not only that the U.K. exports financial services to the EU, it’s also that a number of international financial institutions use London as their Europe hub.
So, I’m a little bit skeptical as to the extent to which the full loss in business from Brexit can be made up from new global relations, but that’s not to say that none of it can. There are some opportunities.
For example, can it work in a complementary, rather than competitive, way with New York such that it benefits from that connection? And what opportunities can it lever in Asia, say with Australia? A degree of caution is needed here, as beyond China, Hong Kong and Singapore, there aren’t many large Asian financial centers. In practical terms, certainly when the U.K. was an EU member state, it was easier to trade with Europe than Asia Pacific, particularly in services.
The U.K. is focused on fintech and tech more generally at the moment, in terms of its industrial strategy, although the U.S. is clearly hugely dominant in this area.
We will look back at the period from early 1990s to Brexit as a time when London incorporated Europe into what was, and has always been, much more of a global outlook for the City of London — such as the ways in which London sought to attract finance from China in the early 2010s. This was part of China’s strategy to internationalize its currency, the renminbi or RMB. Under former Prime Minister David Cameron in the mid 2010s, London and the City of London corporation worked hard to position London as the leading western RMB center.
London’s focus might change in terms of some of the sectors that are important to it, and it’s likely to be a bit smaller, but it will still be the largest financial center in Europe.
The China example is quite powerful because it shows the risks as well as the opportunities globally and the ways in which partnering internationally is as much a geopolitical set of questions as it is geo-economics.
There are implications, for example, if you work closely with China, given the new U.S. administration’s approach to China — and before that, the Trump administration’s approach. The U.K. is also looking more generally at former and current commonwealth countries, particularly in the Asia-Pacific region.
The impacts of that for financial services are more limited than in other sectors. Although RMB finance in London grew in the mid 2010s, there has been much less activity in that area since then.
And the early evidence is that the city under this government is going to try to seek out new markets, particularly in relation to fintech and also in relation to sustainable and green finance.
HALL: I think it will. And here, although I’m a little bit reluctant to do so, I don’t think you can untangle this from COVID and the way in which the pandemic has impacted London quite significantly already.
In a booming professional services economy, people are prepared to pay the higher price, and I mean the high price, both in terms of housing, but also in terms of things like air quality and access to services, to live in London because of the opportunities that are provided.
There’s already evidence that there’s been quite a significant migration out of London. Some of that is EU nationals leaving after Brexit. But there’s also quite a significant migration out of London to more rural areas, as people try to create space in the pandemic.
I don’t see a collapse in its economy or anything like that, but it could be a more challenging time economically for London than we’ve seen recently because of the way in which Brexit has hit the financial services and the way in which the pandemic has hit London’s economy in general.