"Capital City: London as a Financial Centre" by Hamish McRae and Frances Cairncross (Methuen, 262 pages, £16.99).
Review by Alex Murray.
Writing a book about the City of London is rather like painting a picture of a colony of rabbits - by the time that you have finished the picture the numbers have changed. Many more rabbits have been born, many have died, some have been eaten by foxes, but the colony goes on.
In this well researched and comprehensive book, Hamish McRae and Frances Cairncross have painted a detailed picture of the City colony as a financial centre at the start of a new decade. "Capital City" was first published in 1973. It proved to be enough of a seller to justify a couple of revisions in the first decade. Now this "new and fully revised edition" takes account of the extraordinary activities of the 1980s.
The numbers are perhaps the most impressive of the facts arrayed here. The value of the British pension fund industry is now some £220 billion. The life assurance companies have £207 billion of funds under management. The unit trust movement is worth some £51 billion. There are some 800 insurance companies operating in London, including 160 from overseas, writing (in 1989) about £20 billion of premium income. There are 523 banks ... and so on. It is no wonder that so many people work in the City, and that so many aspire to.
Yet, as we have seen in the past few years, it is not always possible to keep unemployment at bay. Life can be turbulent, as well as cyclical, in the financial markets. The October 1987 crash which followed a roaring bull market, Big Bang, the Lloyd's of London scandals, the bad debt provisions of the banks - all are summarised here. The book also covers all of the significant changes, such as the shift away from fixed exchange rates in 1972 to a free international market in currencies, and back to the exchange rate mechanism.
For the general reader this is an easily digestible introduction to one of the world's great financial centres. But McRae and Cairncross are not content with a simple "tour d'horizon". They comment on trends that they see developing, even-handedly and from a vantage point of experience. And they conclude that the 1990s will not be easy for the City.
It gives a useful perspective to be reminded that, when Lloyd's of London "revealed in 1968 that it had lost £38 million", this was "a larger loss than Lloyd's had ever made in profits to that date". Much upheaval ensued at that time. This summer it has looked like a case of "plus ca change" in the Square Mile.
(Alex Murray is a former City editor of The Sunday Telegraph.)