Theresa May’s brand of conservatism doesn’t include a natural affection for global financial institutions. In almost every sense, she’s more Maidenhead than Moorgate.
And yet surprisingly, she has a stronger connection to the City than any Prime Minister since John Major, having spent 20 years in and around the Square Mile first with the Bank of England and then the Association for Payment Clearing Services, now the UK Payments Administration. This may not have been at the sharp end of City deal-making, but it’s clear that she enjoyed it. “The City is an incredibly dynamic place to work,” she tells me, adding: “It’s a real go-getting, can-do place.”
We meet at the Conservative Campaign Headquarters in Westminster, and the PM has just returned from campaigning in the Westcountry. The TV screen outside the meeting room blasts out a Sky News report on the stick she’s getting for not attending Wednesday night’s party leaders debate, but if she’s concerned by the coverage she doesn’t show it.
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May possesses none of the swagger that one associates with Cameron or Osborne. In its place there is a certain softness that aids the flow of conversation and reveals a warmer, more relaxed style than the one that comes across on TV or during set speeches.
As we discuss transitional agreements, euro-clearing and capital markets it’s clear that May spends more time thinking and talking about the City than her style of politics would suggest. Somewhere along the way the calculation has been made that there are no votes to be had in being a cheerleader for the banks, but that doesn’t mean she isn’t alive to the issues.
Source: Greg Sigston/City AM
“The City is hugely important and one of its great strengths is something that people often don’t think about, which is the whole eco-system that is there… different financial services interacting with each other, the legal system around them, the accountants… the tremendous expertise and skills.”
This eco-system overwhelmingly backed Remain, so how can she reassure the City that their interests will be defended in the negotiations? “I’ve talked about the need to get a really good trade agreement with the EU… it’s not just about goods, it’s about services as well because we have that huge benefit of the City and we need to make sure we’re getting a good deal for the City.”
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Does she consider UK financial services to be a major string in her bow for the negotiations? She quotes OECD research that highlights, in her words, “how important the role of the City of London is in terms of access to capital for firms and people within the EU”. When pushed on whether it would, therefore, be unwise for the EU to seek to damage the City, she says she hopes the 27 EU states recognise “the role that the City plays in supporting their economies and their businesses and also the fact that it has taken many years for the City to build up those expertise, to build up that eco-system [and it] can’t be done by somebody else at the drop of a hat”.
May warms to this theme when I raise the thorny issue of euro-clearing and EU moves to shift this lucrative bit of financial infrastructure out of London and back to the continent, post-Brexit.
“We hear those voices raised from other EU member states who think they might have an opportunity to encourage the development of their financial services, of certain parts of the EU becoming the sort of financial centre that London is, but I think what we need to show is two things: first of all this doesn’t happen overnight, it takes years to build up the whole eco-system that supports financial services and [secondly] the City of London is a benefit to other countries, to businesses in other countries.”
She is emphatic, though still diplomatic, when I say that some figures in the EU see the City’s decline as an inevitable byproduct of Brexit and are already working to chip away at its position. “I think they [EU states] all benefit from the expertise, the skills, the size and the capability of the City and anything that diminished that would not be sensible for them.”
This is certainly the most robust defence of City interests that the PM has made to date, and should offer some reassurance to those who feel that financial services aren’t getting the attention they deserve in the Brexit debate.
Nevertheless, optimistic rhetoric only goes so far. The complexity and uncertainty facing the City has already seen plans put in place to shift thousands of roles to cities in the EU. On this point, May says “by definition when we’re going through negotiations there will be a degree of uncertainty… I think what’s important is that we as a government work with the City and financial services, recognising their needs and their interests.”
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One issue on which the City would value clarity is on any planned transitional arrangement, or what May calls “implementation period”. She’s confident that the Europeans will agree to such terms on the grounds that it “isn’t in anybody’s interests to simply walk towards a position where there’s a cliff edge… people will need a time to adjust”.
There is, however, one part of May’s agenda that leaves the City particularly ill at ease: immigration. I put it to her that attacks on “the citizens of nowhere” and vocal criticism of a global elite leaves some in the City feeling that she doesn’t like this part of town very much.
Source: Greg Sigston/City AM
She interrupts me to protest “that is not a fair picture of what I was saying at all” and insists that firms will still be able to welcome “the brightest and the best” as part of a system that does, ultimately, reduce net migration. It’s an issue that’s as much about politics as policy, but she must be aware that the rhetoric matters and her stance appears to clash with a new found zeal for an open, trading, global Britain.
Yesterday she made a speech in which she revelled in the notion of freeing ourselves from “the shackles of the EU”, so I ask her where she wants the country to turn. She says that discussions have already started with a number of countries about developing new trade links. “We can’t sign any trade deals until we leave the EU but we can talk to countries in advance of that and we’ve been doing that… obviously we’re in discussions with the Americans and a number of other countries around the world have said they’re very keen to be building that relationship with the UK, the Gulf states for example.”
May dismisses reports that hers is a government less interested in business than previous administrations. Arriving in Downing Street she disbanded Cameron’s business advisory board, but insists she enjoys warm relations with businesses and representative organisations. An early hire in her team was Jimmy McLoughlin who used to work on policy at the Institute of Directors. This was taken as a sign that May was more interested in SMEs than the CBI. She says “I’ve been having people into Number Ten, talking to them about their sectors, understanding what it is they need from their government and from the Brexit negotiations.”
She’s keen to point out how much worse the alternative is, saying that a Corbyn victory next week would have a “hugely negative impact on our economy and on businesses”. “I think we would see reduced investment in the UK, businesses would be driven out of the UK and we’d see fewer jobs in the UK,” she adds.
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May wants people to see Brexit as a moment of collective national endeavour, an opportunity that offers “a really, really exciting future for the UK.” It’s clear that she sees financial services as a vital part of that future, and though many in the sector are still reeling from the Brexit vote she says she detects in her conversations with international banks a real desire to stay in London and she is adamant that the City, with her help, will retain its global significance.
It isn’t at the centre of her campaign, but May, and those around her, are prepared to fight the City’s corner in the coming battle with Brussels.