Fri, Jan 27, 2017 - Page 9 News List

Post-Brexit London’s fate as cultural and financial center

The UK capital perhaps felt the greatest shock when Britain voted to leave the EU. Will the impending split really be ‘economic self-sabotage’ for London, or will the city’s status as a cultural and business leader remain intact?

By Tom Campbell  /  The Guardian

Illustration: Mountain People

On a balmy July evening not more than four years ago, London officially opened the Olympic Games. As with so much else that summer, the opening ceremony projected a city that was full of confidence: Open, diverse, prosperous and good-humored. London had shaken off the financial crisis to retain its status as the cultural and commercial capital of Europe.

Since then, it has dominated rankings of international business competitiveness, overseen the construction of the Crossrail high-speed line, attracted capital and labor from across the continent and enjoyed economic growth far outstripping the rest of the country.

Yet for many Londoners, the summer of 2012 now feels like a different era. For while the reverberations of the Brexit vote in June last year were felt around the world, it was surely the UK capital that felt the greatest shock.

A city with close economic and cultural ties across Europe and home to almost a million EU nationals, London firmly backed Remain — with parts of the inner city registering the strongest EU support in the country. More than a fifth of Europe’s 500 largest companies have their headquarters there, and London Mayor Sadiq Khan subsequently described the prospect of full exit from the EU market as “economic self-sabotage.”

As anyone who has recently spent time in the UK capital can attest, the referendum itself seems to have done little to dent the animal spirits of London’s consumers. Restaurants, shops and bars seem as busy as ever. Tourism numbers have held up and there is evidence that the weakened pound has encouraged more international visitors to stay and spend.

However, London is not Barcelona or Rome. It is a city with a population of more than 8 million, and an economy the size of Belgium’s. Its prosperity has depended not simply on tourism, but on being a leading center for business, finance, education, technology and creative industries.

Will such sectors, so essential to London’s economic and cultural identity, maintain their dominance once the UK is outside the world’s largest trading block?

BUSINESS HEADQUARTERS

There is no part of the British economy subject to more speculation and debate than its financial services sector, overwhelmingly centered in London.

While there are those, including the former governor of the Bank of England, who emphasize the opportunities of being outside the EU’s regulatory environment, the more common view is that these are outweighed by the benefits of the single market — after all, more than a third of the UK’s financial services surplus comes from trade within the EU.

Before the referendum, a clear majority of British Bankers’ Association (BBA) members believed that Brexit would have a negative impact, while one of the City of London’s most senior figures, Mark Boleat, has repeatedly warned since June last year that the industry will suffer.

While the political focus is usually on banking, London’s sector is better understood as a broad range of inter-linked services, covering finance and investment, accountancy, management consultancy, communications, IT and much more. There are, for instance, more than 200 foreign law firms operating in the UK, the majority of them in London.

CENTRE FOR LONDON RESEARCH DIRECTOR

Richard Brown is clear that, while London has always been as global as a European city, EU membership has “played a significant part in London’s growth over the last 25 years, from the way that city institutions have been able to do business across the continent, to the European workers that fill London’s hotels.”

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