Some of the City's leading lights yesterday delivered an upbeat assessment of London's ability to remain a global centre for financial services in the face of Brexit – so long as it fights for it.
Lloyds Banking Group chairman Lord Norman Blackwell was joined by the likes of Aberdeen Asset Management boss Martin Gilbert and Lloyd’s of London chief executive Inga Beale at the City Week event in London’s Guildhall on Thursday.
“I’m not complacent, but I do think London and UK financial services can weather a situation where there is no deal,” Blackwell said.
“In the months that have passed since the referendum, all the financial firms in London have been working through their contingency plans, and most have found ways that they can accommodate continuing to serve clients within the European Union.”
The banking boss seemed to dismiss remarks made by HSBC chairman Douglas Flint, who compared the City to a “Jenga tower” when warning of the potential effects of Brexit in January.
Blackwell told the conference yesterday: “I’d prefer the analogy [of the] Tower of London, something with foundations that are deep.”
He also suggested that while firms will move some jobs and operations to the EU, no other European city will erode London’s dominance.
Insurance market Lloyd’s of London has already announced plans to create a new EU base in Brussels, where a handful of staff will be based. But chief executive Beale admitted yesterday: “We believe that London will still very, very much maintain its global position as the... centre for insurers.”
Gilbert, co-founder of Aberdeen, was also relaxed about Brexit at the event. “I think we’re probably the most sanguine of the financial services,” he said, explaining that big asset managers already have operations set up in the EU.
Helena Morrissey, head of personal investing at Legal & General, also said the asset management industry is “in a relatively good place”. But she added: “Countries like France, which is the second largest centre in the EU asset management centre… would take the business if we do not stand up for it.”
Elsewhere, Santander UK boss Nathan Bostock spoke of the need for the UK to fight for and retain its dominance in fintech. He said the UK is the number one global centre for fintech, ahead of 20 other hubs, due to favourable regulatory conditions, an innovation culture, a close proximity to expertise and access to finance.
“It’s absolutely critical that we continue to support those key enablers,” he said. “There are another 20 fintech hubs out there, they’re growing all the time, they will seize the opportunity if we don’t help support those enablers going forward.”
Warnings against protectionism
Several figures at the City Week event condemned protectionist noises coming from the EU and warned the UK government against any similar moves.
London Stock Exchange Group chief executive Xavier Rolet warned of the damage the EU would inflict on itself if it makes a grab for the City’s lucrative euro clearing market.
Rolet also said Europe “has not been competitive for decades, or at least has lost the edge in terms of competitiveness”.
On the possibility of the European Commission requiring clearing of euro-denominated derivatives to take place within the EU, he said: “There is always a deep cost to protectionism. But if you protect, you fragment, you isolate, you stall… you end up being less connected. The cost to consumers… rises, and in the end business goes away.”
A host of other figures at the City Week event condemned the prospect of greater protectionism within the EU UK, with some raising concerns about the Conservative party’s manifesto.
Anthony Belchambers, chairman of the honorary advisory council of the FSNForum, said: “We seem to have forgotten the importance of sustaining an internationally-competitive European markletplace, particularly in a globalised environment. We mustn’t lose sight of that long-term division in all the acrimony that will take place in the negotiations.
“If I may say so, pulling up the drawbridges, restricting market access, is not what Europe needs.”
The Legatum Institute’s Victoria Hewson said: “In this country, I don’t sense that protectionism is particularly at the forefront of people’s minds. In fact, people are still very much in favour of Britain as a global trading nation.
“But some of the policy directions we’re hearing from the outgoing government, in the Conservative party manifesto around industrial policy, are slightly concerning, and are in fact at odds with that open trading agenda.”
Open Europe’s Stephen Booth added: “Some of the measures in the Tory manifesto are of some concern. The attitude to immigration is one, but also on greater intervention in markets.”