Will London Cease To Be A Global City Without The EU?
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By Hadi Kabalan
London was the centre of global finance, bar none.
The deregulation of the UK financial industry by Margaret Thatcher in the 1980’s and the creation of the European single market for financial services and the repeal of the US Glass-Steagall Act in 1999 brewed a heady cocktail of American, European and Asian banks all transacting globally from a talent-rich English-speaking hub.
The 2000s were London’s golden years, no less meaningful to the city that the Roaring 20’s were to New York. The City was at the confluence of global trade, finance, art and culture riding on the optimism of Cool Britannia! It was an unstoppable hub attracting the most ambitious and talented from across the world.
Bankers are fond of saying that their assets are their people, their people walk out of the office every night and they have to give them an environment that they want to walk back into every morning. In London, the majority of those people came from all over the European Union.
Young, busy, cosmopolitan, curious and free spending, the diverse population that London had attracted to the business and banking sectors was also a magnet for other industries drawn to the opportunity to provide the best: the most ambitious auctioneers, artists and architects. Food retailers, clothiers and restaurateurs all flocked to London, mostly and most easily from EU countries.
Much of Europe suffered great economic hardship after the financial crisis of 2008. London recovered quickly however as its position as global financial hub, as well as a fun place to spend money, continued to attract wealth and capital fleeing global instability, and particularly from Arab countries engulfed in or fearful of wars.
All cities aspiring to attract the best and the brightest need to provide them with two things: the opportunity to succeed and create wealth, and the availability of fun ways to spend it.
London inside the EU was not only able to attract the best and brightest bankers and business people from across Europe, but also the most ambitious European talent in industries that make a city fun to experience.
London outside the EU loses not only easy access to bankers, but also to artists, creatives, technologists, waiters, hoteliers, bakers, furniture creators, and countless other talented people who would have come to London to practice their skills and pursue their ambitions.
All the banks have contingency plans for serving European markets in a post-Brexit environment. Some will shift their legal domicile, others whole divisions. Some will open new subsidiaries in Berlin or Dublin, Frankfurt or Amsterdam or Paris and shift existing staff.
But what about new staff? The loss of London as a European hub also risks its place as a global hub. New hires will be directed to Asia and the US Pacific, for example, rather than to anywhere else in Europe.
Brexit has the potential to starve London not only of bankers and business people but also of every talent that makes a city fun to live in. And ultimately the people are the assets and they walk out every night, and they need a reason to walk back in in the morning.