Britain's departure from the EU will dominate 2017.
Theresa May has set out her 12 Brexit objectives, Article 50 will be triggered shortly, and elections in France, Germany and the Netherlands threaten to further destabilise the existing order. Every sector of Britain’s economy will be affected. Protecting the future of Britain’s financial services industry – which contributes an enormous £71bn in tax a year and employs more than 2.2m people – will be crucial.
Last year, in my role as the City of London Corporation’s special representative in Europe, I made formal visits to all 27 EU member states; most of them after our referendum, and the majority more than once. The City is Europe’s global financial centre and it is necessary to build relationships, deliver messages, correct misconceptions and piece together a comprehensive picture of pan-European opinion on financial and professional services.
What picture has emerged, especially since the referendum?
First of all, while there is a keen interest in Brexit across Europe, it is worth remembering that it is not all-consuming for them, in the way that it often feels like it is in Britain. The main topic of political conversation in Germany, for example, is the refugee crisis. The main subject in Greece is, unsurprisingly, the continued economic travails of Greece, and whether another government will fall.
How the EU and Britain are viewed also differs massively across the member states. There are EU countries that look to Britain and admire many of our economic and institutional instincts: Denmark, Sweden, Ireland, the Czech Republic, the Baltic States. We must continue to encourage these countries to assert themselves during the Brexit discussions. But it is also true that others are less well disposed to Britain and resent that our indifference towards the EU has turned into outright rejection. This is a strong emotional strand in Brussels, an inescapable backdrop to the forthcoming negotiations.
UK politics is followed in extraordinary detail in every EU country. It is both advantageous and disadvantageous that English is so widely spoken and the British media’s output is so widely consumed. Every UK politician should be aware that, at all times, they are speaking to a European audience.
Ideas like requiring firms to declare their non-UK employees have been badly received across Europe. We should, in my view, avoid being too meek and self-abasing in our engagement with EU countries, but excessive bravado and the appearance of nationalism can be counterproductive too.
I am now having conversations that would have been unthinkable pre-Brexit and pre-Trump (the two are frequently grouped together by Europeans). The plausibility of a Le Pen victory in France is widely cited; some think it would destroy the EU. In one southern European country I had a discussion at a senior level about whether Germany would try to hold the remaining Eurozone together if France left. The speculation was that an interim period could enable an orderly re-adoption of national currencies by some states. This is pretty wild talk, outside the mainstream European discourse, but the fact that people have these discussions at all is fairly extraordinary. The integrity of the central EU architecture is not meant to be in doubt.
There is widespread respect for the City, and acknowledgement of its strength. Many have worked in London, or in the City specifically. Many powerful Europeans also have children studying in Britain, and visit frequently. They acknowledge that no other European financial services centre comes close to London. There is receptiveness (although it stops short of full acceptance) towards my frequent assertion that the City is a European asset, not just a British asset.
There is, though, still an exaggerated sense of the degree to which the success of the City is reliant on its access to the EU. The Single Market is important for many City businesses, as is the ability to recruit talented EU nationals, but it is often necessary to remind EU audiences that London is a global financial centre, and that our peer group consists of New York and Singapore, not European financial centres.
It is an ongoing task to correct the perception that the EU has the power to make or break the City. The City was not created by the EU and it does not exist due to its benevolence; they should not overplay their hand. At the same time, it is also realistic to acknowledge that the EU has the ability to harm the City, but that they would be sensible not to.
Some of the smaller and more economically liberal countries – the Irish, for example – see their interests as complementary to those of the City. Some, however, are hostile to the idea of Europe’s global financial centre sitting outside the Eurozone. That is why a central objective of mine is to convince enough people in Europe that they have a stake in the City’s success, and that its diminution (beyond any small post-Brexit adjustments) will harm them, not help them. Think about your own businesses, not just your politics, I say to them. View Europe, I add, in a wider context, through the eyes of leaders in China or America: it makes no sense to inflict unnecessary harm on the City, one of our continent’s indisputable global-level assets.
Politicians across Europe enter 2017 with trepidation. They will walk across an electoral minefield holding the EU in their hands. While they welcomed the greater clarity on Brexit that came from May’s speech, the overwhelming reaction I have heard has been that her words were not warmly welcomed.
They did, however, respond very positively to Britain emphasising our desire to be a force for solving European problems, not just (as they may see it) creating them. Practical ideas and a cooperative disposition will be well received: on proposed transitional arrangements, on immigration, on security, on diplomacy, on reaffirming our European cultural heritage.
We, in the City, and in Britain, need to stick up for ourselves, and not be pushed around, but we also need the empathy and imagination necessary to achieve a mutually-agreeable outcome with minimum damage.