The City will watch the election with interest
The fate of the financial services industry is rarely a battleground in election campaigns but though the City won’t get much attention (beyond Labour’s ham-fisted criticism of it) the future of financial and professional services will certainly be determined by the next six weeks of campaigning.
Labour have made clear to City leaders and business groups that they have set their sights on the sector.
A Financial Transaction Tax would only be the start. And as for the Tories? It’s conceivable that the election result could leave the party in office but not in power, unable to pass a Brexit deal and leaving the City yet again contemplating a no deal departure — or at least many more months of uncertainty.
It is of course possible that Boris Johnson returns with an enhanced majority and in those circumstances the government would need to urgently review the City’s competitiveness and attractiveness.
As we reported yesterday, the tax burden on this vital sector climbs ever higher while the weight of regulation makes genuine innovation and growth extremely difficult.
Beyond Brexit, work must be done to ensure that the City retains its truly global status. The latest figures from the Office for National Statistics (ONS) illustrate the importance of this international connectivity.
Exports from UK financial services and insurance firms surged to a record high of £82bn last year, up from £78bn in 2017. The sector’s trade with the EU also increased from £30bn in 2017 to £32.6bn in 2018, while services exports to the US, Canada and Japan all grew.
As City groups were keen to point out yesterday, the figures underline the importance of the sector, but they should also focus the minds of all sensible politicians and regulators who wish not only to protect this national asset, but see it grow yet further.
Parties in this election should also reflect on their promises to spend as-yet-unaccounted for billions on improved hospitals, more police officers and infrastructure plans, and it would be wise for them to remember that the City — whether they like it or not — is the engine room of the British economy.
The ONS export data proves the success of a sector contending with unprecedented political uncertainty, but continued growth cannot be taken for granted.
The next government must do all it can to safeguard and strengthen this vital national asset. The old adage about the goose and the golden eggs remains very relevant today.
Main image: Getty