Thirty years ago this week, the City of London underwent a transformation that would set it on a path to global dominance in financial services.
The Big Bang, as it became known, was enabled by new technology, regulatory reform, political will and entrepreneurial endeavour. Over the ensuing three decades, the City came to represent the beating heart of a new, global financial system. It is, therefore, fascinating (perhaps even poignant) that we begin this week chewing over the words of Anthony Browne, chief executive of the British Bankers' Association, who warned over the weekend that the City's position is in mortal danger, with many banks planning to relocate within the EU “before Christmas”.
Some commentators found it odd that the banking industry's spokesman would crop up in the pages of the Observer (the paper that carried Browne's comments and turned them into front page news) but warnings of a Brexit-related catastrophe get a good hearing at a publication that views June's referendum result as an unmitigated disaster.
In reality, there wasn't much in Browne's warnings that he hasn't already said in his newsletters or at the recent BBA conference. One City source involved in close discussions with the government says that talk of a banking exodus can be summed up as follows: “If you've got 5,000 people in London and 500 in Frankfurt, you're probably now wondering whether you need to send 1,000 more to Germany.”
That's not to downplay the risks that a messy Brexit poses to the City, but it does serve as a timely reminder that we are not talking about entire financial institutions fleeing to the continent with a “closed” sign swinging on the doors of their London HQ.
As one EU diplomat observed recently, moving financial services is like moving nuclear waste: expensive and very risky. Furthermore, as Browne notes, the EU doesn't stand to gain if the City is castrated. The good news is that, after a shaky start, government appears determined to fight for the City in its upcoming negotiations. It's also important to appreciate, as Iain Martin does in the conclusion of his excellent book on the history of the City, Crash Bang Wallop, that “the City will survive, and prosper. It usually does”.