NEWS | London’s Future


other countries, will now have to look at alternatives for their operational set up,” he said. “They all take it as a given that, two


years down the road, they will not have any access to the European market plus they won’t be able to serve their clients from London and thus they are looking to benchmark different jurisdictions one against the other. Certainly new financial institutions will look to choose a continental European jurisdiction rather than opting for London. The real consequences of Brexit will be in the medium term rather than immediate.” Soon aſter the referendum result,


French prime minister Manuel Valls, told journalists: “We know that groups based in the City are planning to leave for Dublin, Amsterdam, Frankfurt and Paris.” All agreed then? No chance. Enter Simeon Djankov, executive director of the Financial Markets Group at the LSE who explained on The Conversation website why he thinks London will remain Europe’s main financial centre. ❶ The pre-eminence of the British court system in upholding the rule of law, including the protection of creditor and shareholder rights.


❷ The superiority of the UK’s university education in economics and finance over its continental counterparts.


➌ The UK’s tax and employment regulation that is conducive to the industry’s health and profits.


Djankov writes: “Protecting the interests


Paris, Dublin and Madrid are all coming to the UK to pitch to bankers. I am pro- competition, and long may they try to make their labour market and fiscal policy more attractive to international investors. That is not the problem. The problem comes when national governments try to use the EU exit negotiations to build walls across the Channel to split Europe’s integrated financial market in two, in order to force jobs from London.” And 24 hours aſter Browne had


spoken, Nicolas Mackel, chief executive of Luxembourg for Finance, was telling Radio 4’s Today programme that several of London’s financial institutions had already been in touch. “Financial institutions which are based in the UK now, whether they are British or from


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of creditors and shareholders from the rapacious behaviour of competitors or the state is obviously important for attracting financial services. On this score, the UK is ahead of the rest of Europe. The World Bank’s Doing Business project ranks the UK fourth in the world in shareholder protection, behind only Hong Kong, New Zealand and Singapore. “France is in 29th place when it


comes to the strength of laws protecting shareholders, Germany is 49th. In terms of protecting creditor rights, the UK ranks 19th in the world, France 79th, and Germany 28th. Of course, the rule of law can improve in Europe so that financial investors feel equally well protected in Paris or Frankfurt. But this process will take years, perhaps decades. “Insurance is another sector where


European activity is highly concentrated in London and where Brexit may hurt.


But the UK’s main competitors are in Asia (Singapore and Tokyo) and the US. The access that London has to European money is based on proximity and historic relationships, not on being part of the EU. In short, even in insurance markets it is hard to see a rapid shiſt away from the City of London.”


One can’t help but fear that


today’s politicians may be suffering from the same fate as Jim


Hawkins a few years from now


All this and we still haven’t considered


access to the single market and passporting. Fans of the so-called ‘Hard Brexit’ argue that European leaders will not block trade with the UK because it is bad for business. Unfortunately though, it is not business people conducting the negotiations but politicians and German Chancellor Angela Merkel has consistently said that Britain will not get concessions on the freedom of movement while retaining full access to the European single market. “If I start making concessions on the


freedom of movement, then another country will tomorrow come and say: ‘I don’t want so many Bulgarians and Romanian workers either’,” she said. “And then a third country will come and then the extreme forces from Europe will come and then we’ll soon all be closing our borders again and not having any freedom at all and then that’s no longer Europe. If Britain says no (to the freedom of movement of people), it can’t get full access to the European single market.” At the end of Treasure Island, Jim Hawkins knows there are more riches leſt on the island but refuses to undertake another voyage as the first was so traumatic. One can’t help but fear that today’s politicians may be suffering from the same fate a few years from now. Q


DIRECTOR OF FINANCE 15


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