It's not London that stands to suffer the most post-Brexit

EDITOR'S BLOG: The 'just managing' are going to find things even harder.

by Matthew Gwyther
Last Updated: 17 Nov 2016

And so the Brexit Phoney War continues. We are heading towards to the proper opening of hostilities next March when the real live ordnance starts being lobbed back and forth. It’s currently all Big Talk, willy-waving and juvenile banter about prosecco and fish ‘n chips. So far inflation remains in check, employment levels at an 11 year high and the only casualties appear to be purchasers of Toblerone and Marmite. But the worst is yet to come.

This week we have heard from EY that around 83,000 job losses would occur over the next seven years if euro-denominated clearing was forced out of London and into Europe. But EY added that the domino effect would be to hit up to 230,000 dependent jobs elsewhere throughout the UK.

Then, yesterday, Jes Staley, the CEO of Barclays expressed confidence that London would maintain its ‘gravitational pull’ as one of the few leading centres for global capital markets despite the possibility that Brexit would mean business leaving the UK. Despite all the uncertainty, he said, 'The users of capital find the providers of capital, not the other way around, and the providers of capital, by and large, are resident in London and New York. I don’t think London will lose its gravitational pull in terms of management of capital in any reasonable timeframe.' The advent of The Donald across the water, he added, made Brexit seem like a ‘bit of a footnote.’

One suspects he’s onto something here. Even if London had real trouble maintaining passporting it still has much in its favour. Those who have visited Paris recently all note what a sad ghost of its former self the city remains. When the biggest story coming from the French capital is the reopening of The Bataclan by Sting, it’s a reminder that Paris is hardly the sort of place that the Masters of the Universe want to move to bring up their families. Likewise Frankfurt. Many bankers would rather be in Dublin, the dark horse relocation venue, than Paris or Frankfurt.

Then we had the welcome news from Google that it plans to double its headcount in London. The Californians are to proceed with their long term plan to open a 1m sq ft building near their existing King’s Cross site. They have even given the design job to designed by British ‘architects’ Heatherwick Studio. (Heatherwick, as members of the architects profession will tell you is a designer not a qualified architect.) This will house 7,000 employees, up from about 4,000 today.

Sundar Pichai, Google chief executive, said: ‘Here in the UK, it’s clear to me that computer science has a great future with the talent, educational institutions and passion for innovation we see all around us. We are committed to the UK and excited to continue our investment in our new King’s Cross campus.’

The Google news emphasises the fact that London remains the best city in Europe for digital entrepreneurs because of its access to capital, an entrepreneurial culture and the existence of a skilled workforce, according to the European Digital City Index. The ranking of 60 European cities features nine in the UK, six of which get into the top 20. Based on its access to mentoring networks, knowledge spillovers from the nearby University and market conditions, Cambridge is ranked in 12th place for startups, just ahead of Bristol (13), Oxford (15) and Manchester (16). Other UK cities featured are Edinburgh (19), Birmingham (23), Glasgow (36) and Cardiff (40).

Yet again all these stories suggest that, for all the coming headwinds, London appears to sail on. Regardless of where you stand on party politics, the capital is fortunate in having Sadiq Khan, a mayor keen to push the idea that 'London is open' and policies like London-only visas that would keep the city rolling in new talent. 

If and when a hard Brexit occurs - or a soft one - the losers are likely to be the less well off and areas outside London. Where of course they voted in large numbers to get out of Europe. Any pain suffered by the capital will be far less than the grief that will be suffered by less economically robust parts of the UK and those more vulnerable people who live there. 

The will to Brexit still contains within it a lot of the kind of falsity that Trump preached when he promised that the deleterious effects of globalisation would be reversed for his fellow Americans by re-opening coal mines and steel works. Like his Mexican Wall, his blanket ban on Muslims and the suggestion that his pawing and groping were mere locker room talk never to happen again….it ain’t gonna happen, folks.

The answers provided by those who exploit the backlash from those angry white males who have been ‘forgotten’ and ‘left behind’ remain cruel lies. But the ‘just managing’ have yet to find out the fact and, sadly, when they do, they will find that managing has got even harder. Especially if they live outside of London.


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