There is a financial services-shaped hole in the government’s economic strategy

 
James Frayne
Views of London from the top of St Paul's Cathedral
The City barely got a mention in this week's Autumn Statement (Source: Getty)

Oscar Wilde famously wrote that “there is only one thing in life worse than being talked about, and that is not being talked about.”

For anyone who works in the City, that seems a particularly pertinent quote right now. For Wednesday’s Autumn Statement – one of the biggest events in the economic policy calendar – barely mentioned the City or financial services at all.

After the best part of a decade of being the subject of every left-leaning politician’s attack line, banks and other financial services firms find themselves almost entirely ignored by this government. The Autumn Statement made it clear that it cares far more about an industrial strategy for the regions than it does about a thriving City.

Many businesses might be breathing a sigh of relief. Better, surely, for politicians to leave the City alone completely than to tinker pointlessly and perhaps unhelpfully with new regulation. There is something to that. And the government did not announce any new policies that City firms would die in a ditch over.

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But not being front of mind should concern those that work in financial services given the scale of the changes to its working practices that might evolve as we leave the EU – a process that will begin in as little as four months. Maybe City lobbyists have it handled, but the government’s economic policy looks to have been almost entirely taken over by its industrial strategy.

Greg Clark’s Business, Energy and Industrial Strategy Department is not nearly as powerful as the Treasury but it is increasing its importance – and some of the best policy brains in government, and the policy world that supports it informally, have gravitated to this new area. Regional industrial policy – with its focus on devolution, urban economics and productivity – has become genuinely fashionable in policy circles. The best brains are not fighting to get into financial services policy-making.

As I have written in these pages before, no one should be under any illusion about the government’s commitment to addressing regional imbalances. There is no sense that the government will look to make the country more equal by dragging London down – but there is also no sense within government that the City ought to be prioritised.

This is not to say that, when the time comes, the City will not be protected. No sensible government will allow such an important sector to be damaged. Or, perhaps more accurately, they will not allow it to happen to the best of their knowledge and abilities. But if the best brains are not focused on financial services, it is not hard to see how mistakes might happen.

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What next for the City, then? City firms should certainly be prepared to do the intellectual heavy lifting on Brexit themselves. That does not mean 20 pages of vague policy positions, but seriously detailed policy that can be implemented by government. This is hard but their alternative is to wait for the Brexit Department to get around to addressing their concerns. (Extraordinarily, the City is barely in the immigration debate).

In addition, City firms that want to find other ways to stay relevant to the prevailing public policy agenda should find a way of playing themselves into the government’s industrial strategy. Over the last few years, various businesses – law firms, banks, VCs, pension funds, insurance firms – have looked at how to help finance and service a massive expansion of infrastructure projects in provincial Britain.

That effort needs to continue and to become part of the financial services industry’s mantra to government – that the City is needed to make industrial strategy work. That might sound odd to an industry that might think of itself as having more in common with New York than Yorkshire. But we live in strange times.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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