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

There is no doubt that in the days following the referendum, the mood among a business community known for its optimism and energy was one of anxiety and gloom. Stories of investment deals abruptly collapsing were compounded when a German political party sponsored a van to drive around east London with the message “Dear start-ups, keep calm and move to Berlin.”

TechCrunch editor-at-large and veteran commentator on the London tech scene Mike Butcher described how the “Brexit hangover” in the weeks after the result had left entrepreneurs “bewildered” and “reeling.”

Nerves have steadied since the summer with little immediate sign of a slump in hiring or investment.

In November last year, there was a major confidence boost when Google confirmed a new UK headquarters housing 7,000 staff in King’s Cross, but concerns are still prevalent, particularly around restrictions on free movement.

It is estimated that a third of London’s technology workers, including many company founders, are born outside of the UK. The mooted skilled visa and work permit systems are difficult to reconcile with a sector characterized by project work, rapidly changing occupations and the need to hire specialist contractors at short notice.

Karen Clements, deputy managing director at consultancy Low Europe, which advises many technology businesses on their overseas strategies, is concerned by the referendum result and subsequent national policy announcements, despite its apparent strengths.

“London’s success has largely come from its business connections to the continent’s markets and skilled workforce. If these are damaged, then it is hard to see how it won’t suffer,” she says.

OPEN FOR BUSINESS?

As commentators have observed, the Leave campaign was a coalition of contrasting world views, united in opposition to the EU.

There was undoubtedly a libertarian strand which saw Brexit as a chance to embrace free trade, and for London to model itself on the likes of Singapore or Hong Kong, but of more significance electorally were strong protectionist impulses: Hostility to immigration in particular, but also to foreign ownership and finance — all of which have been essential to London’s economic dominance.

If these impulses prevail, then it is difficult to see how the city can retain its global standing. If London is not “open for business” to the rest of the world, then it is not really in business at all.

While the question of the UK’s relationship with the EU and rest of the world dominates UK politics, there is also a profound shift of relations between national government and the cities and regions. London, after all, is a city whose electorate diverged strongly from the rest of the country, and while its EU nationals were unable to vote in the referendum, many of them work in sectors crucial not just to London’s economy, but to the UK as a whole.

As successive mayors often point out, London generates a huge surplus to the Treasury, and is responsible for almost 30 percent of the national tax revenue. Whatever national politicians may think of London, it is hard to see how they can do without it.

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