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Brexit & the City: The important role of financial and professional services across the UK

The financial and professional services industry today is vital to the functioning of our economy, it employs 2.2 million people across the country, more than two thirds of these jobs outside of London.

When Queen Victoria opened the fabulous Crystal Palace at the Great Exhibition of 1851 the UK was without a doubt the world’s leading industrial power, controlling more than half of the world’s production of iron, coal, and cotton cloth – the staples of the industrial revolution. This dominance in manufacturing and industrialisation continued for many decades, and even in the 1970s manufacturing contributed more than 25% of the UK’s GDP. While we still lead the world in some areas of manufacturing, particularly high-tech industries such as aerospace, the UK’s most important private industries are now financial and professional services.

The City of London has been a global centre for business for hundreds of years, constantly reinventing itself to reflect the needs of the country and the world. In the 19th century the Pool of London was the busiest port in the world, with thousands of ships docking at London’s wharfs to accommodate the booming industrial trade from the heartland of the UK, known as the workshop of the world. Following the decline in British manufacturing the City has developed itself as a leading centre of finance to service not only British, but European demands for financial and professional services. This outward focus is only matched by the likes of Singapore and Hong Kong. The City is still transforming itself to stay with the times, adding a vibrant fintech industry to the other industries where we are world leading, such as legal services, insurance and shipbroking.

In today’s world, financial services touch our lives every day, with banks and investment firms protecting our money, and helping us save and grow our money for the future. Our investment and savings industry has been so successful that the average pensioner household no longer relies on state benefits for the bulk of its income. Our well established insurance industry ensures that there is ample competition for consumers, allowing best value to be achieved. London’s status as the world’s leading financial hub has contributed to it becoming a centre for green finance and carbon trading.

The financial and professional services industries employ more than 2.2 million people across the country, which equates to roughly one in every fourteen jobs. In fact, two thirds of these jobs outside of London. JP Morgan employs more than 4,000 people in Bournemouth, making it the largest private employer in Dorset. Citibank employs 2,000 people in Belfast. Bank of America Merrill Lynch employs 1,000 people in Chester. These jobs are often high quality, skilled positions, providing fruitful opportunities to new generation of Britons.

These industries are vital to the functioning of our economy, with financial services alone providing more than £66bn in taxes to the exchequer, funding everything from the NHS, to paying the salaries of teachers and soldiers. The UK is the world’s largest exporter of financial services, generating a trade surplus of approximately £47bn a year.

UK banks cater for around four million small businesses, lending to finance expansion and investments that benefit millions of people across the UK. Similarly, large companies from across the world come to London to list their companies on our stock market and raise money to fund expansion and growth.

The financial crisis of 2007-2009 rightly led to questions about the role of financial services in the UK, but many lessons have been learned, and important reforms have been undertaken. Risk is managed much more effectively in banks and lenders across the world, and a more civically minded culture is taking hold.

Having world-class financial and professional services industries are just two of the reasons why London is one of the world’s leading metropolitan areas. London leads the world in art, theatre, architecture and film, drawing experts from all over the world, enriching the lives of millions of people across the capital and country. This is made possible by having a strong and growing economy, with successful companies supporting the arts. The City of London Corporation is the country’s fourth largest funder of culture, after the Government, Lottery and BBC.

The financial services industry is also the most charitable in the UK, giving more than £245 million in cash to charities in 2013 – roughly a third of all charitable donations in the UK. The contribution in kind – most importantly staff time - is even greater.

There needs to be a thorough debate on the issues that Brexit brings up, with businesses carefully assessing the impact of the alternatives and feeding those assessments into the policy-making process. It is important that the Government fully takes into account in the Brexit negotiations the role of the financial and professional services industries, not to protect “the City” but rather to protect jobs, tax revenue and the efficient functioning of the economy.

The UK must continue to have a thriving financial and professional services industry and to remain influential on the international stage, and to continue to be an attractive place to do business. This should be the guiding principle in the Brexit negotiations, not abstract notions of hard or soft Brexit.

Mark Boleat, Policy and Resources Chairman, City of London Corporation.

Photo: Getty
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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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