tag:theconversation.com,2011:/us/topics/city-of-london-28498/articlesCity of London – The Conversation2023-12-01T12:14:48Ztag:theconversation.com,2011:article/2189392023-12-01T12:14:48Z2023-12-01T12:14:48ZFTX and Binance: how latest crypto scandals could influence public opinion on digital currency regulation<p>True believers in cryptocurrency have had a rough few weeks. The US government just <a href="https://www.nytimes.com/2023/11/21/technology/binance-changpeng-zhao-pleads-guilty.html">fined Binance</a> – the world’s largest crypto exchange – US$4.3 billion (£3.4 billion) for its involvement in money laundering. </p>
<p>It forced the firm to accept <a href="https://www.programmablemutter.com/p/how-the-feds-bounced-binance?utm_source=profile&utm_medium=reader2">intrusive monitoring</a> and demanded that its secretive boss, Changpeng Zhao, step down and pay a personal fine of $50 million. Zhao, known as CZ, has been called the <a href="https://www.reuters.com/technology/changpeng-zhao-crypto-king-binance-chief-ousted-us-crimes-2023-11-21/">most powerful man in crypto</a>.</p>
<p>The industry is still reeling from the conviction of Zhao’s bitter rival, Sam Bankman-Fried, earlier in November on seven counts of fraud and conspiracy. His company FTX – previously the second-largest crypto exchange in the world – collapsed in November 2022. SBF, as he is commonly known, could theoretically face more than 100 years in jail when he is sentenced <a href="https://www.nytimes.com/2023/11/11/business/dealbook/sam-bankman-fried-sentencing.html#:%7E:text=The%20maximum%20term%20is%20more,country%2C%20also%20allow%20for%20flexibility.">in March 2024</a>. Several other <a href="https://www.ft.com/content/b95708cd-d4ce-41ce-886a-3c119a7df9a3">former leading crypto executives</a> are also under investigation or being prosecuted. </p>
<p>Crypto has just squared off against the US state, and at halftime the result is state power 2 – crypto 0. After this display of muscular regulation on one side of the Atlantic, what is the future of crypto regulation in the UK? </p>
<p>The UK government has repeatedly <a href="https://www.gov.uk/government/news/government-sets-out-plan-to-make-uk-a-global-cryptoasset-technology-hub">vaunted its ambition</a> to make the UK a global crypto hub. The new minister for the City of London, Bim Afolami, <a href="https://www.ft.com/content/3c833ac4-f74d-4663-b144-e1ea6996cadb">doubled down</a> on this message shortly after taking up his post, warning regulators against going overboard. Speaking at a Financial Times event on global banking, he said: “If you’re regulating a market, in any area, there’s no point in having the safest graveyard”. And then added: “It’s really important that we don’t tar every crypto business as being like FTX or Binance.”</p>
<p>This attitude could put Afolami and the government on a collision course with UK regulator the Financial Conduct Authority (FCA). Former FCA chair Charles Randell <a href="https://www.ft.com/content/723b5753-06e1-4cd8-a629-dd795f9068f2">recently criticised</a> the government’s plans for treating crypto like any other financial investment, saying they risked normalising crypto even though fraud “is a feature, not a bug” of much of the sector.</p>
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Read more:
<a href="https://theconversation.com/what-binances-us-lawsuit-says-about-the-future-for-cryptocurrency-regulation-202930">What Binance's US lawsuit says about the future for cryptocurrency regulation</a>
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<h2>Changing opinions about financial regulation</h2>
<p>The government would say that its view is the democratically legitimate one – no one has elected the FCA. But research shows British people may respond to revelations of wrongdoing in the sector by wanting to regulate crypto more severely.</p>
<p>Through the <a href="https://banklash.bsg.ox.ac.uk/">Banklash</a> research project, my colleagues and I have studied what happens to public opinion about financial regulation when people are exposed to news about financial scandals, such as the <a href="https://www.bournemouth.ac.uk/news/2020-08-24/opinion-ppi-scandal-far-over-heres-why">payment protection insurance scandal</a> in the UK. We found that in multiple countries, the public has clear views about financial regulation, and that when they read about scandals, their <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/ajps.12752">demand for regulatory stringency increases</a>.</p>
<p>Such changes in public opinion are not simply abstract experimental effects. In a separate article, Harvard professor Taeku Lee and I <a href="https://academic.oup.com/ser/article/20/2/635/5933801">have shown</a> how a US Congress <a href="https://www.theguardian.com/business/2010/apr/27/goldman-sachs-senate-committee-hearing">investigation of Goldman Sachs’</a> role in the global financial crisis drew public attention to malfeasance by big banks and the position of political parties on it. In the wake of this explosion of publicity, Republicans dropped their filibuster of <a href="https://www.nytimes.com/2010/07/16/business/16regulate.html">the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act</a>, which was the biggest reform of US financial regulation since the 1930s. Two years after the financial crisis, defending the unpopular big banks was not a hill the Republicans wanted to die on.</p>
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<a href="https://theconversation.com/crypto-what-could-more-regulation-mean-for-the-future-of-digital-currencies-194322">Crypto: what could more regulation mean for the future of digital currencies?</a>
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<p>We have followed up this research with a study this year of British attitudes towards cryptocurrency. Our new work, which has not yet been published in an academic journal, suggests that the FCA is more in tune with British public opinion than the government. Among the four countries we surveyed in March 2023 – with responses from more than 36,000 people – British respondents expressed the highest level of support for crypto regulation. Americans want the least, while France and Germany fall in the middle.</p>
<p>As part of the same study, we also investigated how consuming media coverage of the FTX scandal affected those attitudes. Reading about the scandal caused a significant increase in the appetite to regulate crypto among Brits, starting from an already high base. This is the same effect we found in other areas of financial regulation in our earlier research.</p>
<h2>Understanding opinions about crypto</h2>
<p>It seems reasonable to expect that the recent demonstrations of malfeasance by CZ and SBF will lead to a toughening of public attitudes about the regulation of crypto. Despite the fact that cryptocurrency is perceived as an esoteric topic, people have views about it.</p>
<p>UK politicians would be well-advised to take these views into account when trying to balance demands for regulatory stringency and the economic defence of London’s status as an international financial hub. The US government has flexed its regulatory muscles without concern for damaging the appeal of its crypto market, although of course that market is much larger.</p>
<p>Political leaders in the UK should not deceive themselves that the general public doesn’t understand these issues. There will be an election next year. And as Bankman-Fried and Zhao have discovered, you can fool some of the people some of the time, but you can’t fool all the people all the time. Even on a subject as apparently baffling as crypto.</p><img src="https://counter.theconversation.com/content/218939/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Pepper Culpepper's research was supported financially by an Advanced Grant from the European Research Council under the European Union's Horizon 2020 research and innovation program (grant agreement no. 787887).</span></em></p>The general public may want tighter crypto regulations but is the UK government listening?Pepper Culpepper, Blavatnik Professor of Government and Public Policy, University of OxfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2144432023-10-31T16:47:03Z2023-10-31T16:47:03ZGreat Fire of London: how we uncovered the man who first found the flames<figure><img src="https://images.theconversation.com/files/550395/original/file-20230926-21-irhyzf.jpeg?ixlib=rb-1.1.0&rect=49%2C26%2C2506%2C1460&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Great Fire of London by Josepha Jane Battlehooke (1675).</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Great_Fire_London.jpg">Museum of London</a></span></figcaption></figure><p>If you had been in London on September 2 1666, the chances are you’d remember exactly where you were and who you were with. This was the day <a href="https://www.historic-uk.com/HistoryUK/HistoryofEngland/The-Great-Fire-of-London/">the Great Fire</a> began, sweeping across the city for almost five days.</p>
<p><a href="https://www.museumoflondon.org.uk/museum-london/great-fire">The Museum of London</a> is due to open a new site in 2026. And in preparation for this, curators of the Great Fire gallery decided to examine the stories of everyday Londoners. </p>
<p>As I’d been working with the museum on a project about teaching the Great Fire in schools, I was asked by Meriel Jeater, curator of the Great Fire displays, if I could help research the lives of these Londoners. Top of our list for investigation were the residents of <a href="https://www.thehistoryreader.com/world-history/thomas-farriner/">Thomas Farriner’s</a> bakery in Pudding Lane, where the fire began.</p>
<p>There has been lots of excellent work on the Great Fire but, because of ambiguities in the surviving sources, historians have different conclusions about who was in the bakery. Farriner, his wife, children and anonymous servants were among the people mentioned in modern accounts. But it was quickly clear I needed to go back to the manuscript evidence to find answers.</p>
<p>Two types of official investigation into the fire’s causes were carried out in 1666: a parliamentary enquiry and the trial of <a href="https://blogs.bl.uk/untoldlives/2022/08/robert-hubert-and-the-great-fire-of-london.html">Robert Hubert</a>, a Frenchman who had falsely confessed to starting the blaze. While you might think Londoners would have a keen interest in who was there at the start of the fire, the surviving accounts of exactly who was present are fragmentary. </p>
<p>Full reports from the enquiries were not published. Meanwhile, most writers at the time were, understandably, much more concerned with the fire’s destructive power than describing its beginnings.</p>
<p>As a result, the clearest account of events in the bakery is in a letter from an MP, <a href="https://www.historyofparliamentonline.org/volume/1690-1715/member/harley-sir-edward-1624-1700">Sir Edward Harley</a>, reporting what he had heard. It’s now in the British Library, and was written in October 1666, when the two investigations into the fire were underway:</p>
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<p>The Baker of Pudding Lane in whose hous ye Fire began, makes it evident that no Fire was left in his Oven … that his daughter was in ye Bakehous at 12 of ye clock, that between one and two His man was waked with ye choak of ye Smoke, the fire begun remote from ye chimney and Oven, His mayd was burnt in ye Hous not adventuring to Escape as He, his daughter who was much scorched, and his man did out of ye Windore [window] and Gutter.</p>
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<h2>Narrowing down the suspects</h2>
<p>Other details in Harley’s letter suggested he was reliably reporting what he’d learned. The letter provides a list of bakery residents: Thomas Farriner, his unmarried daughter (Hanna), his “man” (meaning trained workman, aka journeyman) and his maid, who died. Other reports don’t mention the “man” or maid, but put Farriner’s son in the bakery.</p>
<p>A document in the London Metropolitan Archives provided more clues. This records the charges against Robert Hubert and – crucially – the names of seven witnesses against him. At the end were: “Thomas Farriner senior, Hanna Farriner, Thomas Dagger, Thomas Farriner Junior”.</p>
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<a href="https://images.theconversation.com/files/550396/original/file-20230926-15-orh761.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Painting of burning buildings in London." src="https://images.theconversation.com/files/550396/original/file-20230926-15-orh761.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/550396/original/file-20230926-15-orh761.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=731&fit=crop&dpr=1 600w, https://images.theconversation.com/files/550396/original/file-20230926-15-orh761.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=731&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/550396/original/file-20230926-15-orh761.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=731&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/550396/original/file-20230926-15-orh761.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=918&fit=crop&dpr=1 754w, https://images.theconversation.com/files/550396/original/file-20230926-15-orh761.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=918&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/550396/original/file-20230926-15-orh761.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=918&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">The Great Fire of London, with Ludgate and Old St Paul’s, artist unknown (c.1670).</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:The_Great_Fire_of_London,_with_Ludgate_and_Old_St._Paul%27s.JPG">Yale Centre for British Art</a></span>
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<p>Given that Thomas Dagger was sandwiched between the Farriners, Jeater and I suspected that he might be an unrecognised member of the household. Testing this theory, I was able to establish that the indictment’s list of names began with two men who had heard Hubert’s confession and a third who possibly had. The later names, starting with Thomas senior, appeared to be people who could testify to circumstances in the bakery.</p>
<p>This was exciting, because Thomas Dagger looked like a candidate for Farriner’s “man” in Harley’s account, potentially putting a name to the first reported witness of the Great Fire. Searching online archives, I could see there was a baker named Thomas Dagger running a business in Billingsgate after the fire and having many children. But we needed evidence to put Dagger in Pudding Lane.</p>
<h2>Sleuthing in the archives</h2>
<p>Fortunately, the Bakers’ Company records had not gone up in smoke like so many other guild documents did in September 1666. So I went sleuthing at the Guildhall Library, comparing Bakers’ company information on Farriner’s workforce to names on the indictment. </p>
<p>After much squinting at microfilms, this produced firm evidence for two young men. Thomas Farriner junior had joined the Bakers’ Company in 1669, claiming that right through his father. I was delighted to find Thomas Dagger had indeed worked for Farriner too. He came from Norton in Wiltshire and had been apprenticed to another baker in 1655 before serving out his apprenticeship at Pudding Lane. </p>
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<img alt="A sign from the baker's guild marking the spot of the Pudding Lane bakery." src="https://images.theconversation.com/files/550397/original/file-20230926-15-w9motg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/550397/original/file-20230926-15-w9motg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=391&fit=crop&dpr=1 600w, https://images.theconversation.com/files/550397/original/file-20230926-15-w9motg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=391&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/550397/original/file-20230926-15-w9motg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=391&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/550397/original/file-20230926-15-w9motg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=492&fit=crop&dpr=1 754w, https://images.theconversation.com/files/550397/original/file-20230926-15-w9motg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=492&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/550397/original/file-20230926-15-w9motg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=492&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A sign commemorating the starting place of the Great Fire.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/memorial-plaque-showing-information-great-fire-720966694">Paula French/Shutterstock</a></span>
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<p>That nine-year apprenticeship (unusually long), had ended in 1664, so at the time of the fire he’d stayed on, working unofficially as a journeyman. Of all the names on the indictment, Dagger most clearly matched the description of the man who first discovered the fire.</p>
<p>Continuing the 17th-century <a href="https://pepyshistory.le.ac.uk/who-discovered-the-great-fire/">investigations into the Great Fire</a> was intriguing, but it’s how the bakery residents’ stories are told that matters. One of the great things about having the life stories of people such as Thomas Dagger is that it will help make the history of London more relevant to young visitors. </p>
<p>For example, if you’re a school child from Wiltshire learning about the Great Fire, Thomas Dagger’s presence in the bakery suddenly makes that national history part of your local history.</p>
<p>As a low-status journeyman, Dagger’s name wasn’t memorable to people in 1666 – he’s barely mentioned in the sources. But the hope is that he and others like him might become memorable to visitors to the new London Museum. </p>
<p>The new research will enable the displays to better represent the Farriner household and provide a fuller understanding of this pivotal moment in London’s history.</p>
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<p class="fine-print"><em><span>Kate Loveman received funding from the Arts and Humanities Research Council for this research.</span></em></p>Writers at the time were much more concerned with the fire’s destructive power than describing how it started in any detail.Kate Loveman, Professor of Early Modern Literature and Culture, University of LeicesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2127622023-09-05T12:14:19Z2023-09-05T12:14:19ZLondon is a major reason for the UK’s inequality problem. Unfortunately, City leaders don’t want to talk about it<figure><img src="https://images.theconversation.com/files/546046/original/file-20230903-23-jnvlva.jpg?ixlib=rb-1.1.0&rect=0%2C108%2C4323%2C2852&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">City leaders often appear reluctant to discuss London't role in growing levels of regional inequality.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-uk-april-22-2015-businessman-273414197">I.R.Stone/Shutterstock</a></span></figcaption></figure><p>In recent years, there has been growing evidence that the UK economy is in poor shape. While the latest economic figures suggest it <a href="https://www.bbc.co.uk/news/business-66680188">performed better</a> as the COVID pandemic receded than was <a href="https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpfirstquarterlyestimateuk/apriltojune2020">previously reported</a>, the performance of sectors such as manufacturing, construction and agriculture has been <a href="https://www.ft.com/content/19746fd9-d5d0-4e02-920c-745611705ecf">revised downwards</a>, leading some experts to warn of a greater risk of a recession to come.</p>
<p>Alongside these economic challenges, the UK faces many societal issues – including rising levels of inequality, with the country’s <a href="https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/methodologies/theginicoefficient#:%7E:text=The%20Gini%20coefficient%20is%20a,share%20of%20total%20household%20income.">Gini coefficient</a> projected to reach a <a href="https://www.resolutionfoundation.org/publications/the-living-standards-outlook-2023/#:%7E:text=Although%20income%20inequality%20across%20the,per%20cent%20in%202027%2D28.">record high of 40.8%</a> in 2027-28. In 2022, the richest fifth of the UK population had an income <a href="https://equalitytrust.org.uk/scale-economic-inequality-uk">more than 12 times</a> that of the poorest fifth.</p>
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<p><em><strong>This article is run in partnership with <a href="https://howthelightgetsin.org/festivals/london?utm_source=MP+L23+Conversation&utm_medium=Article+feature&utm_campaign=HTLGI+London+2023&utm_id=The+Conversation">HowTheLightGetsIn</a></strong>, the world’s largest philosophy and music festival, which returns to Kenwood House in London on September 23-24. On Saturday 23, Louise Ashley will join Julia Davies, Gerry Mitchell and The Conversation’s Mike Herd to discuss how to restructure society for <a href="https://howthelightgetsin.org/events/the-common-good-16017">the common good</a>. See the festival’s <a href="https://howthelightgetsin.org/festivals/london/the-big-ideas/speakers">full line-up of speakers</a> and <a href="https://howthelightgetsin.org/festivals/london/festival-passes?utm_source=MP+L23+Conversation&utm_medium=Article+feature&utm_campaign=HTLGI+London+2023&utm_id=The+Conversation">get 20% off tickets here</a> with code CONVO23.</em></p>
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<p>Another factor that marks the UK out is the extent to which its economy is geographically unbalanced. The Financial Times’s chief data reporter, John Burn-Murdoch, recently highlighted how the UK compares on per-capita economic performance <a href="https://www.ft.com/content/e5c741a7-befa-4d49-a819-f1b0510a9802">once London is removed</a>. The answer? Worse than Mississippi, the US’s worst-performing state, because “removing London’s output and headcount would shave 14% off British living standards”.</p>
<p>Some commentators suggest these figures underline the importance of London – and in particular, its financial district – as the UK’s most significant economic asset. According to the City of London Corporation, the financial and professional services sector as a whole <a href="https://www.cityoflondon.gov.uk/supporting-businesses/economic-research/research-publications/city-statistics-briefing#:%7E:text=Financial%20and%20professional%20services%20produced,FDI%20for%20the%20UK%20economy.&text=The%20City%20drives%20the%20economy,85bn%20in%20economic%20output%20annually.">contributed</a> nearly £100bn in taxes in 2020, and £278bn in economic output in 2022. Many of these firms are located in the City, which the Corporation states “drives the UK economy, generating over £85bn in economic output annually”.</p>
<p>An alternative perspective is that these contributions should be balanced against what the City takes out of the wider UK economy. One argument is that the City has been at the forefront of the <a href="https://blogs.lse.ac.uk/europpblog/2022/01/10/inside-britains-financial-revolution/">financialisation</a> of the UK economy, whereby most investment is channelled into assets such as <a href="https://www.theguardian.com/commentisfree/2023/aug/30/wealth-tax-labour-economics-rachel-reeves">property, infrastructure and financial assets</a>, rather than supporting more <a href="https://www.bankofengland.co.uk/-/media/boe/files/paper/2016/understanding-and-measuring-finance-for-productive-investment.pdf">productive investment</a> in new businesses and small firms.</p>
<p>Certainly, the City of London is heavily implicated in the UK’s widening inequalities of income and wealth, both through its daily business activities and its remuneration practices. In 2022, the Institute for Fiscal Studies <a href="https://www.theguardian.com/business/2022/may/04/city-london-bonus-boom-risk-driving-up-inequality-institute-fiscal-studies">warned</a> that the biggest boom in City bonuses since the 2008 financial crisis would further increase this inequality gap.</p>
<h2>The City’s diversity smokescreen</h2>
<p>This is a complex picture, but few disagree that developing a more equitable UK economy and society requires significant structural change. Politically, this has been recognised from most sides amid often <a href="https://www.politics.co.uk/parliament/tensions-boil-over-during-levelling-up-debate/">heated</a> debates about the new <a href="https://www.politicshome.com/news/article/levelling-up-bill-house-of-lords-kings-speech-michael-gove">levelling-up bill</a>.</p>
<p>However, to the extent that the City of London has responded to its role in the UK inequalities, the dominant focus has been on who its elite firms recruit and promote, rather than its wider impact.</p>
<p>My book, <a href="https://bristoluniversitypress.co.uk/highly-discriminating">Highly Discriminating</a>, and the related <a href="https://theconversation.com/class-and-the-city-of-london-my-decade-of-research-shows-why-elitism-is-endemic-and-top-firms-dont-really-care-199474">Conversation long read</a> offered evidence that while the City’s recent focus on diversity and inclusion can be life-changing for a few individuals, to date it has still largely maintained the traditional white, male and privately educated status quo at the top.</p>
<p>Most worryingly, I concluded that such programmes can be used as a smokescreen, giving elite firms a certain legitimacy that distracts from demands for a more open debate about the City’s wider responsibility in driving up geographical and related inequalities.</p>
<p>On numerous occasions (both privately and in public), I have been criticised by City leaders for raising this, on the grounds that it is not only impolite but demoralising for people engaged in diversity and inclusion work, and risks setting that agenda back. I believe such defensiveness highlights how financial and professional leaders protect their privileged position – by policing the boundaries of what is “acceptable” to say about the inequalities to which their firms contribute.</p>
<p>Many City bosses operate <a href="https://theconversation.com/class-and-the-city-of-london-my-decade-of-research-shows-why-elitism-is-endemic-and-top-firms-dont-really-care-199474">within an echo chamber</a> that suggests to them there is more consensus around the City’s positive contribution to UK society than is actually the case. Their power and influence insulates them from criticism and challenge. When it does come, their defensive reaction is stifling a much-needed, nuanced public debate around how to tackle the inequalities that blight so many people’s lives.</p>
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Read more:
<a href="https://theconversation.com/class-and-the-city-of-london-my-decade-of-research-shows-why-elitism-is-endemic-and-top-firms-dont-really-care-199474">Class and the City of London: my decade of research shows why elitism is endemic and top firms don't really care</a>
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<h2>Changing the national conversation</h2>
<p>Over the past decade, <a href="https://www.researchgate.net/publication/293014505_Understanding_social_exclusion_in_elite_professional_service_firms_field_level_dynamics_and_the_%27professional_project">I have conducted</a> hundreds of interviews with City of London workers at all levels, many of whom are strongly committed to a more equitable economic and social system. I believe they are well placed to help change the national conversation, by asking more of their leaders on this front.</p>
<p>Within many corporate organisations, the issue of inequality is positioned as part of corporate sustainability agendas, or the currently more fashionable “environmental, social and governance”. Yet like diversity and inclusion, as this agenda is implemented within a model that prioritises profit maximisation over economic justice, it may have a similarly cosmetic effect. More meaningful improvements would require business leaders to engage more closely with how we can build a <a href="https://blogs.lse.ac.uk/politicsandpolicy/re-imagining-politics-to-build-a-fairer-society-qa-with-daniel-chandler/">more egalitarian economic system</a> that allows for shared prosperity.</p>
<p>The momentum to help drive these and many other changes requires a majority of the population on board. But this is more likely if business leaders are brave enough to acknowledge the UK’s key structural problems while opening up their related operations to wider scrutiny and debate.</p>
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Read more:
<a href="https://theconversation.com/poverty-in-britain-is-firmly-linked-to-the-countrys-mountain-of-private-wealth-labour-must-address-this-growing-inequality-212741">Poverty in Britain is firmly linked to the country’s mountain of private wealth – Labour must address this growing inequality</a>
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<p>In June, Julia Davies, a founding member of <a href="https://patrioticmillionaires.uk/about-us">Patriotic Millionaires UK</a>, <a href="https://www.theguardian.com/news/2023/jun/30/uk-super-rich-beware-pitchforks-torches-unless-they-do-more">warned delegates</a> at an international investment conference in London of a “real risk of actual insurrection” and “civil disruption” if the inequality gap between rich and poor is allowed to widen. There has long been <a href="https://equalitytrust.org.uk/about-inequality/spirit-level">clear evidence</a> that inequalities are ultimately bad for everyone in a society.</p>
<p>Yet consciously or otherwise, many City leaders still impose tight limits on what is considered reasonable to say about the inequalities their organisations help to create. Perhaps we should take note of the University of Bristol’s Kirsty Sedgeman, who has suggested that in pursuit of social justice, more of us need to become “<a href="https://www.google.com/url?q=https://www.faber.co.uk/product/9780571366835-on-being-unreasonable/&sa=D&source=docs&ust=1693733842307721&usg=AOvVaw1H8Y5NoPVDRtAbaPgheLxP">reasonably unreasonable</a>”, to encourage our business and political leaders to think and act differently, and widen the conversation about the UK’s growing inequality gap.</p>
<p>London and its financial and professional services powerhouse are at the heart of the UK’s failing attempts to level up. We need its leaders to play a central role in our national debate about how to address this problem. This is no time for denial and distraction.</p>
<p><em><a href="https://howthelightgetsin.org/festivals/london?utm_source=MP+L23+Conversation&utm_medium=Article+feature&utm_campaign=HTLGI+London+2023&utm_id=The+Conversation">HowTheLightGetsIn</a>’s theme for London 2023 is <a href="https://howthelightgetsin.org/festivals/london/the-big-ideas">Dangers, Desire and Destiny</a>. The two-day festival on September 23-24 covers everything from politics, science, philosophy and the arts and attracts a host of speakers including Nobel Laureates, Pulitzer prize-winners, political activists and world leading thinkers.</em></p>
<p><em>Alongside the Conversation’s curated event <a href="https://howthelightgetsin.org/events/the-common-good-16017">The Common Good</a>, expect to see Alastair Campbell, Rory Stewart, Ruby Wax, Michio Kaku, David Baddiel, Carol Gilligan, Martin Wolf and more lock horns over a packed weekend of debates, talks and performances. <a href="https://howthelightgetsin.org/festivals/london/programme?utm_source=MP+L23+Conversation&utm_medium=Article+feature&utm_campaign=HTLGI+London+2023&utm_id=The+Conversation">Explore the full programme here</a> and don’t miss out on <a href="https://howthelightgetsin.org/festivals/london/festival-passes?utm_source=MP+L23+Conversation&utm_medium=Article+feature&utm_campaign=HTLGI+London+2023&utm_id=The+Conversation">20% off tickets using code CONVO23</a>.</em></p><img src="https://counter.theconversation.com/content/212762/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Louise Ashley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Business bosses appear reluctant to take part in open debate about their firms’ contribution to growing regional inequalities.Louise Ashley, Senior Lecturer in Sociology of Work, Queen Mary University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2111342023-08-14T15:49:38Z2023-08-14T15:49:38ZHow subtle forms of sexism in financial services led to recent City scandals – what research shows<figure><img src="https://images.theconversation.com/files/542308/original/file-20230811-29-95huly.jpg?ixlib=rb-1.1.0&rect=78%2C39%2C6475%2C4343&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">William Perugini/Shutterstock</span></span></figcaption></figure><p>When I first worked in the City of London, a few years out of university, a company-appointed “style consultant” suggested I would be taken more seriously as a female professional if I wore more make-up and exchanged my trousers for skirt suits. </p>
<p>At the time, I was under the naïve impression that workplace sexism was more or less a thing of the past. But I soon found out I was wrong and this conversation served as an early red flag. </p>
<p>That was 20 years ago. And while the financial and professional service industries have changed for the better, they may not have changed enough.</p>
<p>A <a href="https://www.theguardian.com/business/2023/jul/14/parliament-launches-new-inquiry-into-city-sexism-after-scandals">parliamentary committee</a> has been tasked with renewing an inquiry into sexism in the City of London following claims of sexual misconduct against <a href="https://www.ft.com/content/e5d14398-e866-44b3-8ecb-4e6371167c6d">hedge fund leader, Crispin Odey</a>, which he has denied. The Confederation of British Industry (CBI) has also recently launched an investigation into similar claims and has announced <a href="https://www.cbi.org.uk/media/lkto4nzv/a-renewed-cbi-prospectus.pdf">an overhaul</a> focused on company culture. </p>
<p>Scandals like these matter, of course, most obviously to the women directly affected by them. But such relatively high profile incidents may only represent the tip of the iceberg. There are many more subtle, underlying forms of sexism that pervade the Square Mile and beyond. These forms often lay the foundation for the larger scandals that erupt less frequently.</p>
<h2>A man’s world</h2>
<p>Men still dominate the most senior and highly paid positions in financial services. The 2021 <a href="https://www.gov.uk/government/publications/new-financial-women-in-finance-annual-review-march-2021">Women in Finance Charter Annual Review</a> reported 32% female representation in senior management on average among charter participants, which includes many top banking and finance firms. This is an increase of less than 1 percentage point each year since 2017.</p>
<p>Superior status and pay offer men more power and evidence shows that related abuses and sexual harassment are <a href="https://hbr.org/2017/11/training-programs-and-reporting-systems-wont-end-sexual-harassment-promoting-more-women-will">considerably more likely</a> as a result. Factors contributing to this situation are complex and rooted in history. The City has always been male-dominated. Men (typically white, often from middle-class backgrounds) and the versions of masculinity associated with this picture are seen as “the norm” in the financial services industry.</p>
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Read more:
<a href="https://theconversation.com/class-and-the-city-of-london-my-decade-of-research-shows-why-elitism-is-endemic-and-top-firms-dont-really-care-199474">Class and the City of London: my decade of research shows why elitism is endemic and top firms don't really care</a>
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<p>As American academic <a href="https://www.jstor.org/stable/23416300">Karen Ashcraft</a> points out, in organisations and occupations made by and for men, it is hardly surprising that they continue to enjoy advantages and privileges; they are seen as the “natural fit”. This creates a catch-22: sexist cultures flourish where women are under-represented in positions of power, which is in turn partly due to sexist cultures. </p>
<p>Of course, women can and do compete successfully within these environments. But this often requires them to behave in ways more traditionally associated with men: demonstrating ambition above all else, “total commitment” and, most importantly perhaps, working very long hours. </p>
<p>One of the first academics to explore these tensions, <a href="https://www.wiley.com/en-gb/Capital+Culture%3A+Gender+at+Work+in+the+City-p-9780631205302">Linda McDowell</a>, who researches work and employment issues, described how the City runs on deeply embedded masculinised assumptions. She reported one female banker as making the following point in the early 1990s: “You have to be one of the boys to get on here.” </p>
<p>In 2020, one of my own research participants, a female financier with many years’ experience, made a similar point: </p>
<blockquote>
<p>Overt sexism is probably less common now but success is still based on more of a male model … linear careers, no breaks, long hours. </p>
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<p>Of course, suggesting this is problematic could seem sexist in itself by implying that men and women are, in some essential sense, different from each other. This notion was debunked by <a href="https://www.smithsonianmag.com/smithsonian-institution/powerful-complicated-legacy-betty-friedans-feminine-mystique-180976931/">second-wave feminists</a> who pointed out that most assumed differences between the sexes are the result of socially constructed gender stereotypes. </p>
<p>While often accused of a relatively exclusive form of feminism, centred on privileged white women, they argued this kind of thinking offers a useful justification for women’s lesser position. </p>
<p>On the other hand, feminist scholars and writers have underlined that <a href="https://www.penguin.co.uk/books/326943/the-whole-woman-by-greer-germaine/9780552774345">difference does matter when it comes to biology</a>, as the historical basis for women’s oppression. This is why challenging men’s dominant position requires substantive rather than superficial adjustments to the way society and its organisations are run. </p>
<h2>Strengthening diversity and inclusion initiatives</h2>
<p>Some related ideas have been enshrined in legislation in areas such as maternity, but diversity and inclusion agendas implemented by City firms since around the turn of this century are quite poorly equipped to address the challenge of making these substantive changes. </p>
<p><a href="https://bristoluniversitypress.co.uk/highly-discriminating">As my own research shows</a>, women’s under-representation at senior levels is often attributed to “unconscious bias” on the part of managers. Attention is directed at “de-biasing” individuals through training, with less focus on the underlying systems and structures, which tend to advantage men. </p>
<p>The move towards more flexible work does represent a more structural response. But, where a culture of long hours persists, adopting alternative working patterns might be frowned upon – “success” at work continues to depend on assimilation to dominant norms. </p>
<figure class="align-center ">
<img alt="Illustration of a line of people in suits holding clocks, handing them to a large hand at the top of the queue. City skyline in the background." src="https://images.theconversation.com/files/542304/original/file-20230811-25-htdofo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/542304/original/file-20230811-25-htdofo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=252&fit=crop&dpr=1 600w, https://images.theconversation.com/files/542304/original/file-20230811-25-htdofo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=252&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/542304/original/file-20230811-25-htdofo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=252&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/542304/original/file-20230811-25-htdofo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=317&fit=crop&dpr=1 754w, https://images.theconversation.com/files/542304/original/file-20230811-25-htdofo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=317&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/542304/original/file-20230811-25-htdofo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=317&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">When employers encourage long working hours.</span>
<span class="attribution"><span class="source">FGC/Shutterstock</span></span>
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</figure>
<p>The key problem here is that adjustments are made within existing systems rather than to the system itself. And, arguably, the most important system to address is our current model of capitalism. </p>
<p>The UK has adopted a relatively <a href="https://www.bbc.co.uk/news/business-50562518">extreme form</a> of capitalism, and financial and professional service firms have helped drive that through the <a href="https://www.theguardian.com/news/2018/oct/05/the-finance-curse-how-the-outsized-power-of-the-city-of-london-makes-britain-poorer">financialisation of our economy</a>. This aggressive pursuit of profit can be associated with individualistic, competitive and <a href="https://www.financialreporter.co.uk/reputation-of-toxic-workplace-culture-deters-half-of-finance-workers-from-accepting-">often quite toxic cultures</a>, which can be hostile to both women and men. </p>
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Read more:
<a href="https://theconversation.com/how-to-find-out-if-your-company-has-a-toxic-culture-and-if-it-supports-victims-of-workplace-bullying-204600">How to find out if your company has a toxic culture and if it supports victims of workplace bullying</a>
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<p>This is an unstable platform from which to address questions of sexism and discrimination. Instead, the latest parliamentary inquiry and City leaders should start by acknowledging that high-profile examples of poor behaviour are not necessarily an unexpected aberration from “business as usual”. More likely, they result from cultures where men (and particular versions of masculinity) remain dominant. </p>
<p>Actions in response should tackle the way certain groups or types of people and their way of working dominates financial services. But this will require a more radical approach that addresses the root causes of sexism and inequality, rather than tinkering around the edges of the problem.</p><img src="https://counter.theconversation.com/content/211134/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Louise Ashley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Sexism and misogyny still rears its head in everyday interactions in the financial services industry, not just in the scandals that hit the headlines.Louise Ashley, Senior Lecturer in Sociology of Work, Queen Mary University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2088882023-07-05T15:45:23Z2023-07-05T15:45:23ZWhy banks once flocked to Canary Wharf’s high-tech superstructures, but are now starting to return to the City<figure><img src="https://images.theconversation.com/files/535727/original/file-20230705-25-m26a2j.jpg?ixlib=rb-1.1.0&rect=29%2C5%2C3951%2C2757&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Canary Wharf, London.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/canary-wharf-business-banking-area-sunset-1498895684">IR Stone/Shutterstock</a></span></figcaption></figure><p>HSBC is moving its UK headquarters <a href="https://www.theguardian.com/business/2023/jun/26/hsbc-to-move-to-smaller-city-of-london-headquarters-due-to-hybrid-working">from Canary Wharf back into the City of London</a> as it adjusts to the impact of hybrid work on its office space needs. </p>
<p>This could signal the reverse of the 1990s trend of banks moving out of the City in search of buildings more suited to modern banking. The City’s “Square Mile” financial district is considered the historical centre of British banking. But space and planning restrictions on building expansions made a move to Canary Wharf very appealing as <a href="https://www.jstor.org/stable/23286646">banks navigated the new world of electronic trading</a>, starting in the 1980s.</p>
<p>HSBC’s predecessor, Midland Bank, opened grand offices at 27 Poultry, next to the Bank of England, in 1924. But after its takeover by HSBC in 1992, this office was vacated for more modern premises on Lower Thames Street. </p>
<p>A subsequent move by HSBC to Canary Wharf in 2002 came more than a decade after the first tenants moved to this new site – Morgan Stanley, Credit Suisse, First Boston and Citigroup. Barclays was the last major UK retail bank to leave the City’s Lombard Street for Canary Wharf in 2005. </p>
<p>HSBC is now heading back to the City 21 years later, possibly at the forefront of another wave of migration, as UK-based banks adjust to the world of hybrid working practices. If bank staff are working from home for two or three days in a week, space is less crucial. Indeed, <a href="https://uk.finance.yahoo.com/news/uk-office-occupancy-hits-highest-150826953.html">office vacancies in London are rising</a>, particularly in <a href="https://www.theguardian.com/business/2023/jul/05/it-has-lost-its-appeal-canary-wharf-faces-an-uncertain-future">Canary Wharf</a>. The City of London, although never down and out, appears to be in ascendance again. </p>
<p>Our <a href="https://www.cambridge.org/core/journals/enterprise-and-society/article/quiet-victory-national-provincial-gibson-hall-and-the-switch-from-comprehensive-redevelopment-to-urban-preservation-in-1960s-london/DA166BDF81D6AE1B2C5433543281DCE7">previous research</a> into the flight of banks to Canary Wharf showed it was driven by conservation movements that aimed to preserve the City’s historical buildings. In particular, National Provincial Bank (later NatWest) wanted to transform its headquarters in the 1960s from a prestigious Victorian building into a skyscraper fit for modern banking.</p>
<h2>Fighting to modernise</h2>
<p><a href="https://www.researchgate.net/figure/Exterior-view-of-Gibson-Hall-Illustrated-London-News-1866_fig4_337788669">Gibson Hall</a>, National Provincial Bank’s original home in the City of London, was built in 1865 and served as the bank’s headquarters for over a century. Victorian banks preferred large, grand, highly-decorated buildings in prime locations for their head offices. They wanted to project wealth, reliability, stability and success. In 1894, the German travel writer <a href="https://www.britannica.com/biography/Karl-Baedeker">Karl Baedeker</a>, wrote in his <a href="https://books.google.co.uk/books/about/London_und_Umgebungen.html?id=3itwcES-3UMC&redir_esc=y">guidebook to London</a> that Gibson Hall was a “beautiful, in Byzantine-Roman style, richly decorated hall with polished granite columns and polychromatic decoration”.</p>
<figure class="align-left ">
<img alt="An ornate stone building with arched door and window, topped by statues. Skyscrapers in the background." src="https://images.theconversation.com/files/535779/original/file-20230705-9468-m26a2j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/535779/original/file-20230705-9468-m26a2j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/535779/original/file-20230705-9468-m26a2j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/535779/original/file-20230705-9468-m26a2j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/535779/original/file-20230705-9468-m26a2j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/535779/original/file-20230705-9468-m26a2j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/535779/original/file-20230705-9468-m26a2j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Gibson Hall, Threadneedle Street, London.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/gibson-hall-sunset-1862-directors-national-169006781">Kiev.Victor/Shutterstock</a></span>
</figcaption>
</figure>
<p>However, by the 1960s, the Victorian style of Gibson Hall appeared old-fashioned, while the building itself had become ill-suited to modern banking methods. Telephones and computers required wiring and cables that the building had not been built to accommodate. Also, when Gibson Hall was first constructed, just 100 employees worked in the London office. By 1964, this figure had grown to 1,866, excluding non-clerical staff, according to information we found in the NatWest Group archives.</p>
<p>So, National Provincial’s leaders thought replacing Gibson Hall with a new skyscraper would better reflect the needs, size and status of a large and growing modern bank. It could also escape the constraints of an historic building that was no longer fit for purpose.</p>
<p>Unfortunately for National Provincial, <a href="https://eprints.bbk.ac.uk/id/eprint/18794/">a tide of preservation sentiment</a> was building throughout Britain by the 1960s. In 1964, when a public enquiry was held into the demolition of Gibson Hall, our archival research shows attitudes were firmly in favour of preservation of historic buildings.</p>
<p>The preservation movement was fuelled by the demolitions of several London landmarks in the early 1960s, including <a href="https://www.londonremembers.com/subjects/city-of-london-coal-exchange">the Coal Exchange</a> in Lower Thames Street and the “<a href="https://www.theguardian.com/artanddesign/2017/nov/07/euston-arch-rail-london-demolished-1961">Euston Arch</a>” entrance to Euston station, both Grade II listed. This <a href="https://books.google.co.uk/books/about/A_Broken_Wave.html?id=24uwAAAAIAAJ&redir_esc=y">provoked public outcry</a>. A preservation order placed on Gibson Hall in 1964 blocked National Provincial from demolishing its Victorian home to replace it with a modern tower block.</p>
<h2>Out with the old</h2>
<p>Many banks had offices and branches in Victorian or Edwardian buildings at this time. The preservation order placed on Gibson Hall gave a clear signal that such buildings should stand. By the 1980s there was still a powerful conservation lobby. </p>
<p>But City firms’ need to expand and update their office space took on a new urgency following financial deregulation, known as the “Big Bang”, in 1986. As well as replacing face-to-face share dealing with <a href="https://www.bbc.co.uk/news/business-37751599">electronic trading</a>, the reforms allowed more banks to start trading, not just advise investors.</p>
<p>In addition to computers, banks now wanted large floor spaces for their traders. They needed more equipment and connections for computers and air conditioning to stop the tech overheating. It was more cost-efficient to house this activity in an open-plan environment where cables could be run through the space more easily. Ventilation systems would also operate better in open areas versus small, individual offices.</p>
<p>The Canary Wharf development on London’s Isle of Dogs seemed to offer everything the banks needed at this time. It had been <a href="https://www.taylorfrancis.com/books/mono/10.4324/9780203036464/property-masters-scott">designated as an Enterprise Zone</a>, which removed virtually all planning constraints. This allowed for the construction of a new financial hub unencumbered by the delays inherent in planning enquiries.</p>
<figure class="align-center ">
<img alt="Skyscraper with HSBC sign and logo, amid other skyscrapers, blue sky." src="https://images.theconversation.com/files/535731/original/file-20230705-28-p5ks5m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/535731/original/file-20230705-28-p5ks5m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/535731/original/file-20230705-28-p5ks5m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/535731/original/file-20230705-28-p5ks5m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/535731/original/file-20230705-28-p5ks5m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/535731/original/file-20230705-28-p5ks5m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/535731/original/file-20230705-28-p5ks5m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">HSBC head office, Canary Wharf, London.</span>
<span class="attribution"><span class="source">Chrispictures/Shutterstock</span></span>
</figcaption>
</figure>
<p>Of course there were teething problems during the construction Canary Wharf – not least the impact of the 1989-92 property crash on <a href="https://realestate.wharton.upenn.edu/working-papers/the-crash-and-rebound-of-canary-wharf/">financing for the build</a>. But it eventually gave UK banks what they had wanted for so long: a free hand to build huge skyscrapers. These superstructures not only housed much-needed modern technology, they also served as a monument to their inhabitants’ economic power and prestige. </p>
<p>The movement of HSBC’s headquarters signals another potential shift for banks, but this time to smaller offices to accommodate changing working practices once again. While HSBC was not the first bank to move to Canary Wharf 30 years ago, other banks could follow its lead this time to head bank to the City as hybrid working affects these companies and their employees.</p><img src="https://counter.theconversation.com/content/208888/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>British banks moved to Canary Wharf in search of space and modern facilities but hybrid working needs could drive banks back to the City of London’s smaller spaces.Lucy Newton, Professor in Business History, Henley Business School, University of ReadingPeter Scott, Professor of International Business History, University of ReadingVictoria Barnes, Reader in Commercial Law, Brunel University LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2065832023-06-01T12:10:22Z2023-06-01T12:10:22ZWhy UK inflation is so high compared to EU and US and what to do about it<figure><img src="https://images.theconversation.com/files/529401/original/file-20230531-29-mth44s.jpg?ixlib=rb-1.1.0&rect=107%2C62%2C5865%2C3889&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Price rises are slowing but inflation remains persistent.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/rising-cost-living-inflation-financial-crisis-2164240561">Ink Drop/Shutterstock</a></span></figcaption></figure><p>Britain has a bigger inflation problem than either the US or the eurozone, according to <a href="https://www.reuters.com/world/uk/uk-has-bigger-core-inflation-problem-than-other-economies-boes-mann-2023-05-31/">Bank of England policymaker Catherine Mann</a>. </p>
<p>The latest official UK inflation figures show UK price rises have slowed from double digits to <a href="https://www.ons.gov.uk/economy/inflationandpriceindices">8.7%</a> for the 12 months to April 2023. But this is still above the <a href="https://www.morningstar.co.uk/uk/news/235505/no-let-up-for-boe-as-uk-inflation-figures-mixed.aspx">8.2% rate forecast by the Bank of England earlier this year</a>. </p>
<p>The UK rate is also nearly double <a href="https://www.bls.gov/news.release/cpi.nr0.htm">the equivalent US rate</a> and significantly <a href="https://www.reuters.com/markets/europe/inflation-dips-german-states-pointing-national-drop-2023-05-31/%22%22">higher than the eurozone’s 7% rate of inflation for April</a>, which slowed <a href="https://www.ecb.europa.eu/stats/macroeconomic_and_sectoral/hicp/html/index.en.html">to 6.1% for May</a>.</p>
<p>All three regions experienced the economic shock of the COVID-19 pandemic. EU countries and the UK struggled with dramatically rising energy prices due to Russia’s war in Ukraine. But two UK-specific issues are exacerbating the country’s inflation woes: the adverse <a href="https://theconversation.com/price-inflation-five-ways-stronger-uk-supply-chains-can-help-reduce-rising-food-costs-206039">economic shock of Brexit</a>, and the UK’s reliance on its financial services sector.</p>
<p>As a result, interest rate rises by the Bank of England will not be enough to reduce inflation. The UK government should also play a role by <a href="https://journals.lwbooks.co.uk/soundings/vol-2012-issue-50/abstract-7344/">rebalancing the post-Brexit economy</a> away from financial services towards other traditional industries such as manufacturing.</p>
<p>Interest rates are a <a href="https://www.standard.co.uk/comment/bank-of-england-interest-rates-inflation-andrew-bailey-b1069517.html">blunt instrument</a> for fighting inflation, but they continue to be <a href="https://www.imf.org/en/Blogs/Articles/2022/08/10/central-banks-hike-interest-rates-in-sync-to-tame-inflation-pressures">central banks’ main tool</a>. They <a href="https://theconversation.com/bank-of-england-interest-rate-rise-why-this-could-be-the-last-increase-for-a-while-205337">affect the economy</a> in several ways. The most obvious is in reducing demand for goods and services by increasing the cost of different forms of debt (such as mortgages).</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-you-should-care-about-bumper-bank-profits-201440">Why you should care about bumper bank profits</a>
</strong>
</em>
</p>
<hr>
<p>But interest rates also affect whether businesses can meet their debt repayments and reduce the <a href="https://www.jstor.org/stable/40268893">value of the collateral</a> they provide to banks to secure their loans. This weighs on banks’ balance sheets and so interest rate increases adversely affect the financial sector because it there is a greater risk that these borrowers won’t be able to repay their loans. This is why an oversized financial sector creates headaches for the Bank of England when it tries to tackle inflation.</p>
<h2>The UK’s industrial past</h2>
<p>In the 1950s, the UK had a balanced economy <a href="https://www.tandfonline.com/doi/full/10.1080/13504851.2012.684773">more evenly distributed between manufacturing and the service sector</a>. Manufacturing (including gas, electricity and water utilities) contributed over 40% of <a href="https://www.bankofengland.co.uk/explainers/how-has-growth-changed-over-time">total UK economic output in the 1950s</a> while the service sector accounted for 50%. The UK was responsible for a <a href="https://www.le.ac.uk/ur/emoha/community/resources/postwar/Britain%20in%201950.pdf">quarter of world trade in manufacturing</a>. </p>
<p>The government of the day <a href="https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2580%7Ef3ec872727.en.pdf">prioritised production for export</a>, making the UK a <a href="https://www.jstor.org/stable/2123398">leading shipbuilder</a>, and a European hub for producing <a href="https://edition.cnn.com/2023/01/25/cars/uk-car-production/index.html">cars</a>, <a href="https://manchesterhistorian.com/2013/the-rise-and-fall-of-the-british-coal-industry/">coal</a>, <a href="https://www.bbc.co.uk/news/business-36337180">steel</a> and <a href="https://dro.dur.ac.uk/18175/">textiles</a> to sell to other countries. Science-based industries, such as electronics, computers and engineering were also taking off in the UK, and the country benefited from this <a href="https://www.economist.com/leaders/2012/04/21/the-third-industrial-revolution">third technology revolution</a>.</p>
<p>But advances in science-based industries did not happen soon enough to balance out a collapse in employment in manufacturing in the UK from the 1960s onwards. By 2011 around 80% of British workers were in service industries and <a href="https://www.ons.gov.uk/economy/economicoutputandproductivity/output/articles/fivefactsabouttheukservicesector/2016-09-29#:%7E:text=In%201841%20most%20people%20worked,and%20around%2010%25%20in%20manufacturing.">only 10% in manufacturing</a>. Various factors explain this decline in manufacturing jobs, including routine jobs being replaced by robots and computerised systems, rising imports from China and other emerging countries, and government policy. </p>
<p>In the 1970s, the government championed economic policies geared towards a housing boom and the financial hub of <a href="https://www.theguardian.com/business/2011/nov/16/why-britain-doesnt-make-things-manufacturing">the City of London</a>. The British public were told their future lay in working with their brains <a href="https://www.gresham.ac.uk/watch-now/sir-keith-joseph-and-market-economy">and not their hands</a>. De-industrialisation policies were instigated by UK prime minister <a href="https://journals.lwbooks.co.uk/soundings/vol-2012-issue-50/abstract-7344/">Margaret Thatcher and continued under Tony Blair and David Cameron</a>. </p>
<p>These policies were presented as economic modernisation that would improve workers wages and society as a whole. Even the Labour government, <a href="https://www.economist.com/bagehots-notebook/2018/07/06/labour-is-no-longer-the-party-of-the-traditional-working-class">traditionally associated with the working class</a>, was convinced the future lay in the <a href="https://www.oecd.org/naec/THE-KNOWLEDGE-ECONOMY.pdf">knowledge economy</a> and embarked on making Britain a global service provider.</p>
<figure class="align-center ">
<img alt="London's financial district skyline behind Southwark Bridge over the River Thames" src="https://images.theconversation.com/files/529403/original/file-20230531-19-8lir9y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/529403/original/file-20230531-19-8lir9y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/529403/original/file-20230531-19-8lir9y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/529403/original/file-20230531-19-8lir9y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/529403/original/file-20230531-19-8lir9y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/529403/original/file-20230531-19-8lir9y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/529403/original/file-20230531-19-8lir9y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The City of London.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-england-uk-29-january-2022-2115510095">Richard M Lee/Shutterstock</a></span>
</figcaption>
</figure>
<p>The rise of the <a href="https://www.investopedia.com/how-london-became-the-world-s-financial-hub-4589324">City of London</a>, and the finance, insurance, and real estate industries, under both Conservative and Labour governments has <a href="https://sirc.rbi.org.in/downloads/4Cecchetti.pdf">changed the economic trajectory of Britain</a>. For example, the City has sucked the best-educated people out of other regions and careers and into high-salaried London-based jobs. People who might have become scientists or engineers became bankers or hedge fund managers instead. </p>
<p>So, even though the City <a href="https://www.cityoflondon.gov.uk/supporting-businesses/economic-research/research-publications/city-statistics-briefing#:%7E:text=The%20City%20drives%20the%20economy,1.1bn%20in%20business%20rates.&text=There%20are%20587%2C000%20workers%20in,in%20every%2054%20GB%20workers.">generates £85 billion per year and employs over 580,000 people</a>, it is not a goose that lays Britain’s golden eggs but rather <a href="https://taxjustice.net/press/press-release-city-of-london-costs-uk-4-5tn-in-lost-economic-growth/">a cuckoo in the nest</a>. It has crowded out other sectors that traditionally allowed the whole country to prosper. </p>
<p>And the UK financial sector is now causing another problem: its dominance has made it more difficult for the Bank of England to control inflation because of the concerns about how higher interest rates will weigh on bank balance sheets.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/bank-of-england-interest-rate-rise-why-this-could-be-the-last-increase-for-a-while-205337">Bank of England interest rate rise: why this could be the last increase for a while</a>
</strong>
</em>
</p>
<hr>
<h2>Tackling ‘stubborn’ inflation</h2>
<p>This is why <a href="https://www.bankofengland.co.uk/monetary-policy">monetary policy</a> alone will not be able to tame UK inflation. The bank has <a href="https://www.ft.com/content/b972f5e3-4f03-4986-890d-5443878424ac">spoken about the difficulties it has faced</a> in anticipating the recent rise and persistence of inflation. But <a href="https://www.sciencedirect.com/science/article/pii/S1090944318301820?casa_token=FWqKQte81WkAAAAA:xeZAgbTCJALIb-WqzKEEl8s9vsPz_vhgXxpmmsV5r8ljkqK1nDxIJgJIsdZ3gFp66gd8OArszQ">advancements in statistical techniques</a> and <a href="https://onlinelibrary.wiley.com/doi/full/10.1002/for.2948?casa_token=met-fSTcdroAAAAA%3A7SoLcPMZnYgZkuPU-00wW-4j2D_yyEG-MTzjHzvbsjpuPeHv0yMibBVxX7pkpAqApCd4Nvirk5UB0II">computation power</a> have improved the ability to forecast inflation. On the other hand, unexpected government policies and the structure of the UK economy may have presented more of a challenge.</p>
<p>The bank’s models had little chance to account for the political turmoil and strategy changes resulting from Brexit. For example, <a href="https://committees.parliament.uk/committee/445/eu-goods-subcommittee/news/153116/trade-in-goods-significantly-harder-under-brexit-deal/">trade has become significantly more difficult</a> between the UK and EU following Brexit, reducing supply and pushing up prices. There are also <a href="https://www.ft.com/content/674525e8-ce3e-42aa-b5d1-36260d17179a">more people from the EU leaving than arriving in the UK</a>, putting pressure on wages in particular sectors and adding to the inflation problem. </p>
<p>Brexit, coupled with the oversized UK financial sector, makes the Bank of England’s job of controlling inflation so much harder. The government needs to rebalance the UK economy, with science-based industries playing an important role. This would ensure the Bank of England could adjust interest rates to tackle inflation, without having to worry about how it affects the over-sized financial services sector.</p><img src="https://counter.theconversation.com/content/206583/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>UK inflation has been stubbornly high and interest rate hikes have not yet brought it in line with other advanced economies.Edward Thomas Jones, Lecturer in Economics / Director of the Institute of European Finance, Bangor UniversityYener Altunbas, Professor of Banking, Bangor UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1994742023-02-23T06:15:25Z2023-02-23T06:15:25ZClass and the City of London: my decade of research shows why elitism is endemic and top firms don’t really care<p>During the COVID pandemic, as most wages <a href="https://commonslibrary.parliament.uk/what-happened-to-wages-in-the-coronavirus-pandemic/#:%7E:text=Since%20November%202020%2C%20wages%20have,November%202020%20and%20December%202021.">stagnated</a>, workers in the City of London were enjoying <a href="https://www.theguardian.com/business/2022/jun/11/what-cost-of-living-crisis-bumper-executive-bonuses-make-a-comeback">bumper pay packets</a>. Average partner salaries in one corporate law firm <a href="https://www.thetimes.co.uk/article/lawyers-lead-the-way-as-million-pound-salaries-rain-down-on-the-city-rdmxjfs67">exceeded £2 million</a> for the first time. Investment bankers received their <a href="https://www.theguardian.com/business/2022/feb/16/weve-had-a-run-on-champagne-biggest-uk-banker-bonuses-since-financial-crash">highest bonus payouts</a> since 2008.</p>
<p>City bosses have long justified these exceptional rewards by claiming that they are available to anyone with sufficient intellect and willingness to work hard – regardless of their gender, ethnicity or social class. In the <a href="https://www.goldmansachs.com/our_firm/investor_relations/financial_reports/annual_reports/2003/pdf/GS03AR_businessprncples.pdf">words of Goldman Sachs</a>, one of the City’s most iconic players:</p>
<blockquote>
<p>Advancement depends on merit … For us to be successful, our people must reflect the diversity of the communities and cultures in which we operate. That means we must attract, retain and motivate people from many backgrounds and perspectives. Being diverse is not optional; it is what we must be.</p>
</blockquote>
<p>But studies tell a different story about the City of London’s culture and demographics. In October 1986, the “<a href="https://en.wikipedia.org/wiki/Big_Bang_(financial_markets)">Big Bang</a>” – the name given to the sudden deregulation of financial markets to enhance London’s status as a global financial centre – was also supposed to signal the creation of a new, <a href="https://www.bbc.co.uk/news/business-37751599">more egalitarian</a> City. Yet four decades on, <a href="https://www.thebridgegroup.org.uk/news/partner-law">research</a> <a href="https://static1.squarespace.com/static/5c18e090b40b9d6b43b093d8/t/5f6c69ea4d0d1b29037581f3/1600940523386/BG_SEB_Partner_Law_Sep2020_SUMMARY_FINAL.pdf">shows</a> that more than half of all partners at the leading law firms are white, male and privately educated, while more than 90% of bosses at eight top financial service firms are from society’s most privileged backgrounds – a demographic that comprises just over 30% of the entire UK population.</p>
<p>I began <a href="https://www.researchgate.net/publication/293014505_Understanding_social_exclusion_in_elite_professional_service_firms_field_level_dynamics_and_the_%27professional_project">researching</a> this <a href="https://bristoluniversitypress.co.uk/highly-discriminating">issue</a> more than ten years ago, after briefly working in business development for a City law firm. Despite being appointed in almost equal numbers to men, women were significantly under-represented at the firm’s senior levels, comprising fewer than 20% of its partners. There was also a striking lack of ethnic diversity among all staff, and it was especially rare to see any black lawyers.</p>
<p>Soon after I joined, I was offered a session with a style consultant who, my manager explained, would help me appear “more professional”. The consultant’s primary advice was to wear more make up and put on skirt-suits.</p>
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<img alt="" src="https://images.theconversation.com/files/288776/original/file-20190820-170910-8bv1s7.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/288776/original/file-20190820-170910-8bv1s7.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/288776/original/file-20190820-170910-8bv1s7.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/288776/original/file-20190820-170910-8bv1s7.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/288776/original/file-20190820-170910-8bv1s7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/288776/original/file-20190820-170910-8bv1s7.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/288776/original/file-20190820-170910-8bv1s7.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p><strong><em>This article is part of Conversation Insights</em></strong>
<br><em>The Insights team generates <a href="https://theconversation.com/uk/topics/insights-series-71218">long-form journalism</a> derived from interdisciplinary research. The team is working with academics from different backgrounds who have been engaged in projects aimed at tackling societal and scientific challenges.</em></p>
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<p>In any industry where people are regularly spotlighted as a firm’s most important resource, hiring staff for any other reason than their ability might appear to make little sense. In the City, however, white middle-class men have always been particularly valued for other qualities.</p>
<p>Consider this exchange I had with asset manager Toby* in 2019. I started by asking on what basis his clients selected their financial advisers, to which he replied: “They have expectations of meeting people with expertise, really.”</p>
<p>But when I asked how they assess this expertise, Toby said it was “a difficult question”:</p>
<blockquote>
<p>I think they’re choosing us basically on whether they like the sound of us or the look of us. Most of our sales force is [made up of] white, middle-class males … Let’s try a thought experiment. If we turned up with, I don’t know, a black woman and a white bloke, but a bit spivvy with an Essex accent … Yeah, I don’t know. I really don’t know. God, that sounds really bad.</p>
</blockquote>
<p>Many City executives have told me that a certain type of “social ease”, often cultivated at private schools, allows colleagues to get away with bullshit and bluff. Or as one senior executive at a FTSE 100 firm put it:</p>
<blockquote>
<p>We all know that people with the right accent and mannerisms … sound much more believable. Equally, I want to say that we can see through that – but the truth is, we can’t.</p>
</blockquote>
<h2>‘We give the jobs to other posh people’</h2>
<p>Many of my interviews were conducted in the late 2010s, a time when “diversity and inclusion” was a buzz phrase among elite City firms. I was keen to find out how serious these firms – spanning finance, legal services, management consulting, accounting and auditing – were about changing the social makeup of their staff, particularly those earning the biggest bucks.</p>
<p>Prestigious City firms, some with billion-pound revenue streams, have long tried to position themselves as “<a href="https://www.ft.com/content/376f3374-cf1e-4923-8c24-e4dbafe70b6d">money meritocracies</a>”, where success and promotion is based purely on an employee’s performance and the profits they generate.</p>
<p>Privately, however, City insiders I spoke to repeatedly blamed deviations from this rule on outright favouritism. One hedge fund manager, Michael, confided: “It’s easy to explain. Basically, we give the top jobs to other posh people who are our mates.”</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/509253/original/file-20230209-16-4q8zqk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Four white men in suits walking away from the camera" src="https://images.theconversation.com/files/509253/original/file-20230209-16-4q8zqk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/509253/original/file-20230209-16-4q8zqk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/509253/original/file-20230209-16-4q8zqk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/509253/original/file-20230209-16-4q8zqk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/509253/original/file-20230209-16-4q8zqk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/509253/original/file-20230209-16-4q8zqk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/509253/original/file-20230209-16-4q8zqk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Businessmen in the City of London financial district.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-uk-20-april-2019-business-1822728791">I.R. Stone/Shutterstock</a></span>
</figcaption>
</figure>
<p>Investment manager James said that frequently, recruitment and promotion “becomes a subjective call”, at which point decision-makers typically revert to type. I asked him what “type” that might be:</p>
<blockquote>
<p>Myself … I’m already doing that role and I know what I’m doing. Therefore, I’m more likely to go towards the sort of people who are like I am, which is why you end up with the stereotypical male – mid-40s, white. It’s why the profession’s full of them.</p>
</blockquote>
<p>To date, efforts to diversify according to gender and ethnicity appear to have had very limited results. In 2014, <a href="https://www.suttontrust.com/our-research/pathways-banking-education-background-finance/">The Sutton Trust</a> found that within <a href="https://www.theglobalcity.uk/financial-professional-services">financial services</a>, more than 60% of bosses educated in the UK had attended private schools, as opposed to just 7% of the population at large. And despite many interventions designed to improve representation of women at senior levels, a <a href="https://www.fnlondon.com/articles/under-10-of-top-city-dealmakers-are-women-its-still-very-testosterone-fuelled-20200810">2020 study</a> of the City’s top “deal-makers” in investment banks found that less than one in ten were women.</p>
<p>I believe that City firms’ efforts to become more diverse and inclusive, and to deliver more equal representation at the top, have not worked <em>because they were never meant to</em>. Instead, they are a form of “reputation laundering”, offering only the illusion of change in order to protect their privileges and rewards. This conclusion is based on my interviews with more than 400 City leaders and workers – among them diversity experts and human resource managers charged with trying to change the culture of this rarefied world.</p>
<h2>The phoney ‘war for talent’</h2>
<p>Class-based recruitment strategies are perceived to offer City firms certain benefits – in particular, sustaining the impression of status and prestige to competitors, clients, potential colleagues and even policymakers. This in turn helps justify the high fees they charge, and the exceptional profits they generate.</p>
<p>Defining employee “talent” in narrow terms creates an artificial impression of scarcity in available skills. At entry level, City firms battle to attract graduates from the UK’s most elite universities. This “war for talent” is largely phoney – in reality, the skills the firms need are available from a much wider cohort of graduates – but it has helped convince both City firms and clients of these employees’ exceptional worth.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/509254/original/file-20230209-26-2cg6g6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Three Black men in suits chatting outside an office building" src="https://images.theconversation.com/files/509254/original/file-20230209-26-2cg6g6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/509254/original/file-20230209-26-2cg6g6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=406&fit=crop&dpr=1 600w, https://images.theconversation.com/files/509254/original/file-20230209-26-2cg6g6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=406&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/509254/original/file-20230209-26-2cg6g6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=406&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/509254/original/file-20230209-26-2cg6g6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=510&fit=crop&dpr=1 754w, https://images.theconversation.com/files/509254/original/file-20230209-26-2cg6g6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=510&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/509254/original/file-20230209-26-2cg6g6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=510&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Non-white employees are typically much less likely to reach client-facing executive roles.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-uk-20-april-2019-business-1819187273">I.R. Stone/Shutterstock</a></span>
</figcaption>
</figure>
<p>This narrative was invoked in the wake of the 2008 financial crisis when, despite being closely implicated in this catastrophic collapse, <a href="https://www.ft.com/content/d4f02d66-1d84-11e0-a163-00144feab49a">top bankers argued</a> against punitive regulation on the basis that it would drive “scarce” UK financial talent <a href="https://www.newstatesman.com/politics/2011/06/banks-threats-tax-government">to other countries</a>. More recently, it was used to justify the <a href="https://www.theguardian.com/business/2022/oct/14/bankers-bonuses-double-since-2008-crash-tuc-study-finds">very large bonuses</a> paid out to UK bankers in 2022 amid the growing cost of living crisis.</p>
<p>One law firm partner explained why his firm preferred to appoint “polished” candidates from elite universities, in preference to the very best who might be educated elsewhere:</p>
<blockquote>
<p>From a business perspective, you can’t afford to have people in meetings who will not look good to the clients, [even if] some might be very, very bright.</p>
</blockquote>
<p>In part, this can be explained by City managers adopting a risk-averse strategy to recruitment. In the context of a considerable oversupply of job applications, a “good” degree from an “elite” university acts as an easy signal of probable competency. As asset manager Reena explained:</p>
<blockquote>
<p>If we hire somebody from a completely different background and they don’t work out, the person who hires them is going to look like a fool. [Whereas] if we continue to hire the exact same type of person – the Oxbridge-educated white male, for argument’s sake – and that person doesn’t work out, which often happens, nobody will blame the hiring manager for making that decision.</p>
</blockquote>
<p>Leigh, a former <a href="https://www.investopedia.com/terms/t/trader.asp#:%7E:text=A%20trader%20is%20an%20individual,the%20person%20holds%20the%20asset.">City trader</a>, describes himself as a working-class “<a href="https://en.wikipedia.org/wiki/Barrow_boy">barrow boy</a>”. He said that following the Big Bang in 1986, the City’s banks all started saying they had to recruit “only the best” university students:</p>
<blockquote>
<p>They came from Oxford or Durham or wherever – anywhere that looked good and if they could bullshit their way in … Some of them were good, but not all. They’d come in as graduates and have to learn on the job, but they had no common sense.</p>
</blockquote>
<p>This is not to say that the City has no diversity at all. But demographics differ between job roles, and class differences are most tolerated in more technical or “quantitative” roles such as trading, where performance can be more objectively measured and perceived success does not depend on personal relationships with clients. However, even these roles remain dominated by men, while diversity is considerably more likely in less prestigious and often lower-paid <a href="https://www.investopedia.com/terms/m/middleoffice.asp#:%7E:text=What%20Is%20the%20Middle%20Office,technology%20(IT)%20as%20well.">middle</a>- and <a href="https://www.investopedia.com/terms/b/backoffice.asp#:%7E:text=What%20Is%20Back%20Office%3F,%2C%20accounting%2C%20and%20IT%20services.">back-office</a> jobs.</p>
<h2>The City’s way of ‘doing diversity’</h2>
<p>In the early 2010s, when diversity and inclusion agendas were still quite new, Liam, a black corporate lawyer, sounded somewhat cynical when I spoke to him about the sincerity of these strategies:</p>
<blockquote>
<p>Their dream scenario is to try and find a nice, uncontroversial way to try and ‘do diversity’ without having to change much of anything else.</p>
</blockquote>
<p>Several years after that, Gus, a partner at one of the “big four” accountancy firms, reflected on why they had adopted these diversity agendas:</p>
<blockquote>
<p>Why does anything like this become popular? I guess we were quite influenced by what other firms were doing around the same time – and that’s probably still true today … It was just the buzz in the City at the time.</p>
</blockquote>
<p>While some firms have made efforts to become more diverse in their higher-profile, client-facing and revenue-generating jobs, when it comes to social class the focus has largely been on access rather than career progression. Thousands of young people, generally aged between 16 and 21 and from working-class backgrounds, have taken part in these <a href="https://www.researchgate.net/publication/350590737_Organisational_Social_Mobility_Programmes_as_Mechanisms_of_Power_and_Control">social mobility programmes</a> – often conducted with charities such as the Social Mobility Foundation, UpReach, the Sutton Trust and the City Brokerage.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/londons-skyscrapers-tell-a-rich-story-about-the-citys-worship-of-finance-69743">London's skyscrapers tell a rich story about the City's worship of finance</a>
</strong>
</em>
</p>
<hr>
<p>This seems positive and in one sense it is. I have interviewed several hundred of these students as they aim to secure a career in investment banking or with other financial and professional service firms. Many described these opportunities as “life changing”, telling me uplifting stories of their experiences as they first engaged with the City – sometimes while still at school.</p>
<p>Aspirant banker Max explained how everything about the City seemed to him “oversized” – from the office buildings to the furniture that fills them:</p>
<blockquote>
<p>I mean, you’re in this massive building with these massive tables and chairs, and really awesome decor and art, and there’s people who are really well spoken and really professional in their suits.</p>
</blockquote>
<p>Rahul sounded similarly awestruck as he described how growing up, he had seen the City from a distance but never expected to find himself there:</p>
<blockquote>
<p>My father was a greengrocer. We used to go to the market and [on the way] we’d be able to see the City … I used to literally stand and stare over and imagine what it would be like to be there. To fast-forward a couple of years and be able to be at the [bank’s] office was quite amazing.</p>
</blockquote>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/509260/original/file-20230209-16-lwm7wz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Skyscrapers in the City of London" src="https://images.theconversation.com/files/509260/original/file-20230209-16-lwm7wz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/509260/original/file-20230209-16-lwm7wz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/509260/original/file-20230209-16-lwm7wz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/509260/original/file-20230209-16-lwm7wz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/509260/original/file-20230209-16-lwm7wz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/509260/original/file-20230209-16-lwm7wz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/509260/original/file-20230209-16-lwm7wz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The City of London skyline: ‘I used to stand and stare …’</span>
<span class="attribution"><a class="source" href="https://pixabay.com/photos/skyline-london-financial-district-4587051/">Waid1995/Pixabay</a></span>
</figcaption>
</figure>
<p>Participants of these schemes were frequently told that, given the City’s “meritocratic culture”, they should have high expectations of getting in. As Emily put it: “They say all the time: it doesn’t matter who you are, you can do anything as long as you work hard enough.”</p>
<p>Sam described having learnt that: “Anybody could become the CEO of a major bank. It’s just all about sacrifice … To do well, to rise up the ranks, it’s definitely the people that are the hardest working.”</p>
<p>Yet the reality for these working-class interns could soon feel very different. On entering mainstream graduate recruitment programmes, some told me they quickly discovered that “merit is a myth”. When we spoke in 2019, bank intern Mishal, a black woman in her early twenties from a working-class background, described her experience in visceral terms:</p>
<blockquote>
<p>What those people have been telling you [about diversity] is just the corporate crap that everybody vomits from their mouths … If you’d interviewed me [before] I probably would have said all those things. But now that I’ve actually been in a bank and seen it – I kept saying to my friends over the summer: “I have been sold dreams.”</p>
</blockquote>
<p>Mishal’s disillusionment was striking. “[They’ve] told me one thing and then I’ve come in and it’s a complete opposite other thing,” she complained. “Your motivation has to be so strong, because everything they tell you turns out not to be true.”</p>
<p>Some of the interns I met felt very self-conscious of their “different” appearance and demeanour, compared with the image that is so carefully cultivated by these City firms. Kasia described one of her encounters during an internship at an investment bank:</p>
<blockquote>
<p>My team had sent me to a meeting with about 40 white, middle-aged men. There was not a single female in the room … No one was below 35, 40 years old … I was just trembling with fear – like, I’m not valuable in this room.</p>
</blockquote>
<p>Many interns said they felt strong pressure to assimilate while navigating sometimes hostile and frightening cultures. Kasia described making efforts to change her look and accent, adding:</p>
<blockquote>
<p>I don’t want to be viewed as a social experiment who’s come, like, from the street … I want to be judged based on my abilities.</p>
</blockquote>
<p>Young people like Kasia and Mishal are far from victims and would not wish to be seen as such – although neither went on to be offered a graduate job. However, it is clear that for some young interns, assimilation into the City of London is impossible – especially where class intersects with ethnicity.</p>
<p>Nor are these problems restricted to entry-level recruitment, as evidenced by lower retention rates and slower career progression for those who are employed. A <a href="https://static1.squarespace.com/static/5c18e090b40b9d6b43b093d8/t/5fbc317e96e56f63b563d0f2/1606168962064/Socio-economic_report-Final.pdf">2020 study</a> of eight major financial services firms found that employees from less privileged backgrounds took 25% longer to progress, despite no evidence of poorer performance. Describing how your educational background can cast a shadow over a whole career, asset manager Euan told me, only half-jokingly: “It’s like if you went to an ex-poly – in the City that comes with a lifetime of shame!”</p>
<p>Tanya, a black woman working for a City finance firm, graduated from a leading <a href="https://russellgroup.ac.uk/about/">Russell Group university</a> but still described the barriers – some blatant, others more subtle – that she felt had delayed her career progression within the firm:</p>
<blockquote>
<p>It’s difficult to exactly know the impact because a lot of it’s quite subtle. But I’m always, always focusing on creating the right impression, the right amount of assertiveness … It’s exhausting and there’s less energy to focus on work. But you never want to come across as the “angry black woman”, so even when there is more blatant discrimination, it’s too dangerous to complain.</p>
</blockquote>
<h2>The myth of merit</h2>
<p>Many people are taken in by the City’s “myth of merit” – not least some of its top bosses, who prefer to believe their own positions are based on exceptional talent and hard work, rather than any inherited privilege. Attempts I have made to question this narrative, both during informal conversations and formal interviews, have sometimes met with robust responses. As corporate lawyer Kris said when we spoke a few years ago:</p>
<blockquote>
<p>I came from a relatively humble background myself and I got into the system … I think they would be quite offended if you said the major City firms were unmeritocratic. I would be offended.</p>
</blockquote>
<p>And indeed, some working-class figures have acquired legendary status. In his <a href="https://www.theguardian.com/books/2010/jan/30/city-london-david-kynaston">biography of the City of London</a>, historian David Kynaston profiles several, including John Hutchinson – a “brash whiz-kid” who took on a key role trading gilts at <a href="https://www.nytimes.com/1986/09/28/business/merrill-lynch-s-london-blitz.html">Merrill Lynch</a>. Playing up the successes of such figures has helped to support the City’s meritocratic narratives.</p>
<p>The emphasis on merit also helps cement the impression that these firms are engaged in highly complex work that only the very smartest people can do. In her <a href="https://www.dukeupress.edu/liquidated">superlative work</a> exploring the City’s US equivalent, Wall Street, anthropologist Karen Ho shows how this exaggerated narrative helped situate investment bankers as the epitome of control and technical competency, offering them a “naturalised” right to their place near the top of the social order – both in terms of earnings and status.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/6sbOXBoBZ1c?wmode=transparent&start=38" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">The Big Bang in 1986 changed the culture of the City – but its elitist image has endured despite calls for change.</span></figcaption>
</figure>
<p>Similarly, in London since the <a href="https://www.bbc.co.uk/news/business-37751599">Big Bang</a>, a discourse of “smartness” (of intellect) has become central to the image of investment bankers and other City professionals. This means financial rewards which far outstrip most other sectors’ pay levels can be justified on the basis that they are fairly allocated to “only the brightest and best”.</p>
<p>Many City workers <em>are</em> exceptionally qualified and also very bright. By the 2010s, new entrants to investment banks in the UK were typically among the top 1% of performers in A-levels or equivalent. Corporate lawyer, Rob, explained that while in the old days “it didn’t really matter if you were a bit dim”, the <a href="https://www.independent.co.uk/news/business/analysis-and-features/the-day-big-bang-blasted-the-old-boys-into-oblivion-422005.html">arrival of the American banks</a> in the wake of the Big Bang led to a more “intensive, more competitive style of work … more of a meritocracy”.</p>
<p>However, the City’s highly remunerated jobs are still overwhelmingly done by white men who have benefited from a private school education – the children of the affluent middle and upper classes. Furthermore, if any unfair recruitment practices or treatment of employees come to light, City firms typically employ the shield of “<a href="https://www.nytimes.com/2019/11/20/style/diversity-consultants.html">unconscious bias</a>” to explain away any discrepancies in staff makeup or treatment.</p>
<p>This response can suggest a sort of “no-fault discrimination” where since everybody is to blame, nobody is. Some academics <a href="https://scholar.harvard.edu/iris_bohnet/what-works">argue</a> that putting a heavy focus on unconscious bias reflects a misguided, highly individualised response to what is actually a systemic, structural problem.</p>
<p>But in the City of London, my research shows that discrimination is also, in part, a conscious choice that offers systematic advantages for more privileged groups – while supporting an image of “desirable elitism”. And where this is the case, City firms prefer us to look away.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/ioJAymw7cQ0?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Ian Clarke came through HSBC’s management training scheme in 2008, but resigned from his job in global sales in 2021 after writing a report about the bank’s lack of diversity.</span></figcaption>
</figure>
<p>Investment banks are characterised by opacity and secrecy – sometimes justified by their need to to maintain a “competitive advantage”. But the related use of <a href="https://en.wikipedia.org/wiki/Non-disclosure_agreement">non-disclosure agreements</a> for employment contracts has meant that many discrimination cases involving City firms have never seen the light of day.</p>
<p>Where this was not the case, legal actions and tribunals have periodically shed light on instances of <a href="https://www.cnbc.com/2022/03/17/london-insurance-firm-fined-1-million-over-bullying-sexual-harassment.html">bullying and sexual harassment</a> (leading to a more than £1 million fine) and <a href="https://www.ft.com/content/310caee4-d2d9-4f88-9a2b-f6d790b9eb1b">gender discrimination</a> (£2 million payout). There is strong evidence that the City’s historic “laddish” culture <a href="https://www.thetimes.co.uk/article/has-the-city-booted-out-lad-culture-tfc9mqptl">continues to exist</a> in <a href="https://www.standard.co.uk/business/lloyd-s-of-london-culture-drinking-sexism-b988746.html">pockets</a>, and that in some cases this leads to <a href="https://twitter.com/Telegraph/status/1505838573467144193">hostility</a> towards individuals who exist outside established white, male, middle-class norms.</p>
<h2>Why this matters</h2>
<p>Over the past 40 years, inequalities of income and wealth have become more pronounced in the UK. The <a href="https://ifs.org.uk/publications/characteristics-and-incomes-top-1">share of national income</a> taken by the top 1% increased from almost 6% in 1977 to around 14% in 2019. The City’s remuneration practices are implicated here, with the Institute of Fiscal Studies <a href="https://www.theguardian.com/business/2022/may/04/city-london-bonus-boom-risk-driving-up-inequality-institute-fiscal-studies">reporting</a> in 2022 that the City’s pay and bonus packages exacerbate inequality.</p>
<p>The UK’s <a href="https://www.theguardian.com/commentisfree/2023/jan/30/england-old-boys-club-zahawi-wealthy-network">cosy relationship between finance and politics</a> enhances the City’s influence. Bosses and politicians alike claim this is justified because of the City’s <a href="https://www.economicsobservatory.com/how-important-is-the-city-to-the-uk-economy#:%7E:text=Economists%20use%20the%20expression%20because,City%20(Hutton%2C%202022).">major contribution</a> to the UK economy in terms of jobs, tax revenues and trade.</p>
<p>Yet an alternative argument is that the UK’s oversized financial sector impoverishes the UK, resulting from what author Nicholas Shaxson calls the “<a href="https://www.theguardian.com/news/2018/oct/05/the-finance-curse-how-the-outsized-power-of-the-city-of-london-makes-britain-poorer">finance curse</a>”. He cites <a href="https://www.independent.co.uk/news/business/news/finance-curse-uk-economy-sector-city-of-london-loss-financial-services-a8571036.html">research</a> estimating that an oversized City of London inflicted costs of £4.5 trillion on the UK economy between 1995 and 2015. This is explained in part by lost economic output since the 2008 financial crisis, and in part from “<a href="https://eprints.whiterose.ac.uk/143275/1/Baker%20The-UKs-Finance-Curse-Costs-and-Processes%20final.pdf">misallocation costs</a>” as big finance has generated activities that distort the rest of the UK economy – diverting skills, investments and resources from more productive uses.</p>
<p>Shaxson also points to £700 billion of “excess profits” and “excess remuneration” enjoyed by big finance which might otherwise have contributed to the UK economy. He suggests the salaries, bonuses and profits paid out by the City significantly exceed what is necessary to incentivise the supply of financial products and services in an efficient, competitive market.</p>
<p>At the heart of these eye-watering figures are policies first implemented during the 1980s, which privileged the need to maximise shareholder returns over reinvesting profits. This <a href="https://neweconomics.org/uploads/files/NEF_SHAREHOLDER-CAPITALISM_E_latest.pdf">short-term agenda</a> has been associated with rising salaries at the top, growing inequality in UK society, and even increased levels of environmental destruction.</p>
<p>At the same time, financial institutions have been afforded ever-more influence over UK economic policy. Wealthy City donors have <a href="https://www.independent.co.uk/news/uk/politics/tory-funding-donors-money-general-election-lib-dems-labour-a9362571.html">helped fund political parties</a> to ensure policies are prioritised that protect their interests. City leaders have not only shaped laws and regulations in their favour, but also influenced society and culture. This includes promoting a form of “winner takes all” individualism in which the notion of the common good has slowly dissipated.</p>
<p>In the UK, the <a href="https://policy.bristoluniversitypress.co.uk/why-we-cant-afford-the-rich">poorest 10%</a> pay a higher proportion of their income in tax than the richest 10%, while <a href="https://www.nytimes.com/2021/10/11/opinion/pandora-papers-britain-london.html">corporate tax avoidance strategies</a> have additionally limited the redistribution of wealth. In 2015, the Bank of England’s then chief economist, Andy Haldane, <a href="https://twitter.com/BBCNewsnight/status/625081308063121408">warned</a> that under our system, businesses are now “almost eating themselves”. He called on policymakers to consider new models of corporate governance that “share the spoils more equally between a wider set of stakeholders in a firm”, including employees and customers.</p>
<h2>Will the City ever change?</h2>
<p>In 2021, the <a href="https://en.wikipedia.org/wiki/City_of_London_Corporation">City of London Corporation</a> (the City’s formal governing body) set up an <a href="https://www.cityoflondon.gov.uk/supporting-businesses/business-support-and-advice/socio-economic-diversity-taskforce">independent taskforce</a> with a vision of encouraging “equity of progression”, where high performance is valued over “fit” and “polish”. I was a member of this two-year initiative, which culminated in the publication of a <a href="https://www.cityoflondon.gov.uk/assets/Business/breaking-the-class-barrier-december-2022.pdf">five-point pathway</a> to achieve a more socio-economically diverse City of London.</p>
<p>The impact of this taskforce is debatable, but to be fair to its many committed participants, delivering more inclusive and diverse organisations is a “wicked problem” that is difficult, if not impossible, to solve. Not least because not everybody agrees on the nature of the problem – nor even that the problem exists.</p>
<p>Efforts at change have generally been pinned on the “business case” – that once hiring managers are convinced discrimination is irrational, they will feel compelled to act. Yet this is unlikely to work because the incentives are not there. Class-based inequalities embedded within systems and structures offer elite City firms certain benefits, while diversification carries perceived risks.</p>
<p>The business case sometimes suggests diversification will make the City a better or even safer place, by allowing for cognitive difference while preventing “<a href="https://www.cityam.com/businesses-without-diversity-are-plagued-by-groupthink/">groupthink</a>”. But new entrants are generally subjected to strong socialisation processes that train them to present and even think much the same, as management consultant, Diletta, explained to me:</p>
<blockquote>
<p>As much as [firms] talk about diversity, especially now with all this stuff on social class – it’s almost impossible to exist outside the norms … That’s what training is all about. We’re extremely effective at making sure everybody is packaged up and churned out looking and sounding exactly the same. That’s our product. It’s what we sell.</p>
</blockquote>
<p>It seems that in the City, people can be different as long as they are the same. A genuine desire among many City people to deliver fairer outcomes is no match for institutional inertia. When it comes to social class, firms have historically tended to adopt a “deficit” model where young people from working-class backgrounds are assumed to lack the necessary forms of “polish” to get on, and efforts centre on how these deficits can be addressed.</p>
<p>But the challenges they face are not limited to “polish”. Growing up poor in a rich society contributes to long-lasting and sometimes career-limiting feelings of stigma and shame. Abdul explained his feelings as he struggled to access a graduate position in an investment bank:</p>
<blockquote>
<p>I was surrounded by people who were, I suppose you could say, better than me … I didn’t belong.</p>
</blockquote>
<p>An emphasis on social mobility is an attractive agenda for both City leaders and politicians who can present change as a “win-win” – for talented people and the organisations they join. But in practice, this is a zero-sum game: when opportunities are not expanding in absolute terms, for some people to move up others must move down. Current conversations allow City and other elites to avoid such uncomfortable truths.</p>
<p>Instead they focus on more palatable, less threatening questions of culture and behaviour, over the fundamental changes that are needed if the UK’s resources and rewards are to be more fairly distributed. The City of London must recognise its own role in perpetuating – and increasing – economic injustice if ever this status quo is to change.</p>
<p><em>* All interviewees’ names have been changed to protect their anonymity.</em></p>
<hr>
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<img alt="" src="https://images.theconversation.com/files/313478/original/file-20200204-41481-1n8vco4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/313478/original/file-20200204-41481-1n8vco4.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=112&fit=crop&dpr=1 600w, https://images.theconversation.com/files/313478/original/file-20200204-41481-1n8vco4.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=112&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/313478/original/file-20200204-41481-1n8vco4.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=112&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/313478/original/file-20200204-41481-1n8vco4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=140&fit=crop&dpr=1 754w, https://images.theconversation.com/files/313478/original/file-20200204-41481-1n8vco4.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=140&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/313478/original/file-20200204-41481-1n8vco4.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=140&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p class="fine-print"><em><span>Research mentioned in this article received funding from government and charitable bodies. However, to protect confidentiality I do not mention which organisations. There is no conflict of interest and individuals took part on the basis of informed consent. I was a working group member for the Corporation of London Taskforce on Socioeconomic Diversity, which is mentioned in this article. I am the author of the recently published book Highly Discriminating: Why The City Isn't Fair and Diversity Doesn't Work. </span></em></p>My research suggests City firms’ efforts to deliver more equal representation at the top have not worked because they were never meant to.Louise Ashley, Senior Lecturer, Queen Mary University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1963122022-12-09T14:40:25Z2022-12-09T14:40:25ZBanking reforms expert Q&A: will relaxing the rules help the UK economy and what are the risks?<p><em>Jeremy Hunt, the UK chancellor of the exchequer, has unveiled a package of measures aiming to protect the City of London’s position as one of the world’s leading financial capitals. With the <a href="https://www.economist.com/britain/2022/09/22/the-city-is-fighting-to-carve-out-a-post-brexit-role">UK having lost</a> nearly a tenth of the financial assets it manages since Brexit, plus at least 7,000 jobs, mostly to mainland Europe, much of the focus of these “Edinburgh reforms” is on making London more competitive.</em> </p>
<p><em>This includes rowing back on rules introduced a decade ago to avoid a repeat of the global financial crisis, such as the ring-fence between customer deposits and investment banking activities, and holding finance bosses personally and financially responsible for things that go wrong on their watch.</em> </p>
<p><em>Various other measures are designed to encourage UK financial regulators to prioritise delivering growth and international competitiveness, as well as making it easier for companies to raise capital ahead of a flotation and a consultation on a digital pound. We asked Robert Webb, a professor of banking and applied economics, for his take on what we know so far.</em> </p>
<h2>How are these reforms shaping up?</h2>
<p>I really worry about the prospect of a race to the bottom on regulation rather than prioritising global rules for finance. Each generation forgets how bad we messed up the time before. If you think about the 21-year-olds that I lecture, they were only seven in 2008. So people under a certain age have no first-hand experience of what happened. </p>
<p>The crisis hit because we had no handle on the securitisation process [in which mortgages were packaged up and sold into the financial markets as new products to investors who didn’t understand the risks in the underlying loans]. This meant that the loans were no longer on the mortgage banks’ balance sheets, which meant the bank didn’t have an incentive to keep monitoring them for risks. It also meant they didn’t need to hold as much capital to protect against defaults by homeowners. In effect, these securitised investments were misunderstood and unregulated. </p>
<p>The reason we got into that situation is because of reforms <a href="https://www.goldmansachs.com/our-firm/history/moments/1986-big-bang.html">since 1986</a>. Traditional retail banking is pretty boring: you basically make your money on the spread between the interest you pay depositors and the interest you charge for loans. It’s very conservative and laborious and needs a lot of checks and balances. </p>
<p>The culture in investment banking is totally different. It’s one of spectrum-filling the financial markets with products of different levels of risk and reward. It’s very fast-moving, very sales-based. Those two cultures don’t sit well next to each other. But starting with the big bang reforms of 1986, securitising retail bank loans was the kind of thing that became possible. </p>
<p>The regulations introduced after 2008 are necessary to protect consumers. As we saw during that crisis, it’s very difficult for people outside of banking to see what’s going on inside the machine. </p>
<h2>How does this relate to the new proposals?</h2>
<p>The reforms introduced from 2009-11 were about ring-fencing retail banking from the world of investment banking again. We’ll have to see the detail of the proposals, but if Jeremy Hunt is now saying we should get rid of that and allow things like using retail deposits in investment banking activities, that’s a dangerous move. </p>
<p>As for reducing the liabilities of senior managers, where is the advantage in doing that? We used to talk in risk management about the tone from the top. It emanates down through an institution. If the chief executive is no longer responsible for risk in the same way, how is that going to affect the tone within organisations? </p>
<p>It’s the same with the new duties for regulators. If they are trying to undercut the EU’s regulatory system, that’s worrying. </p>
<h2>Hunt is saying that financial rules have evolved since 2008 and will still protect people – what are your thoughts on that?</h2>
<p>The post-2008 regulations were valid when they were introduced and there is nothing to suggest that they are not valid now. </p>
<p>One point to make is that there are two things here: what the reforms actually do and how the City reacts to them. A lot of companies can circumvent regulations, but the regulations are there to draw a line in the sand. It’s not that exactly the same problems will arise; it’s the culture you create by introducing new relaxations. </p>
<h2>What should be the government’s priority for making UK finance more competitive?</h2>
<p>If we want to compete with Europe and other financial centres, it needs to be on actual business. We need to be more efficient and offer better, more innovative products. </p>
<p>We’ll win at finance by winning at technology. We need to put the infrastructure in place to entice fintech [financial technology] companies to establish themselves in London. People under 35 don’t care about, say, Barclays; everything is on their phone through Apple Pay, Google Pay or whatever. China has led the way here and that’s what we need to prioritise too. </p>
<p>You could also offer tax breaks to financial start-ups, as well as making it as easy as possible for companies to work within the regulations – like they are doing with the <a href="https://www.openbanking.org.uk/">open banking initiative</a>. Everything should be about pushing London as a hub for next-generation banking. That will look very different to the skyscrapers that we associate with finance today: people don’t need that anymore.</p><img src="https://counter.theconversation.com/content/196312/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robert Webb does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The government wants to make UK finance more competitive after the damage caused by Brexit.Robert Webb, Professor of Banking & Applied Economics, University of StirlingLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1764152022-02-11T12:00:21Z2022-02-11T12:00:21Z‘Levelling up’ the UK is a golden opportunity for climate action – but the government is failing<figure><img src="https://images.theconversation.com/files/445083/original/file-20220208-20-jv21im.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C6016%2C4016&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/engineer-under-inspection-checking-construction-process-1488595826">APChanel/Shutterstock</a></span></figcaption></figure><p>Economists no longer talk of decarbonisation <a href="https://www.theccc.org.uk/wp-content/uploads/2020/12/The-Sixth-Carbon-Budget-The-UKs-path-to-Net-Zero.pdf">as a cost</a>; climate action is now widely seen as an investment. Like any investment in new economic sectors, money spent is expected to be more than made back by the benefits it brings. </p>
<p>Since the 1970s, one sector of the UK economy which has particularly benefited from government support is <a href="http://speri.dept.shef.ac.uk/2018/10/05/uk-finance-curse-report/">finance</a>. The UK finance sector has grown to be the largest of any in <a href="https://orca.cardiff.ac.uk/103188/1/The%20Role%20of%20the%20State%20in%20the%20Financialization%20of%20the%20UK%20Economy.pdf">the G7</a> relative to the rest of the national economy. This was accompanied by the fastest decline in manufacturing as a percentage of GDP among its economic peers.</p>
<p><a href="https://www.tandfonline.com/doi/full/10.1080/13563467.2018.1473355">Nurturing</a> the financial centre of the City of London at the expense of the wider economy has contributed to <a href="https://www.ons.gov.uk/economy/grossvalueaddedgva/bulletins/regionalgrossvalueaddedincomeapproach/december2016">the gulf</a> in economic activity between the capital and the rest of the country. Into this scenario came the government’s recent <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1052064/Levelling_Up_White_Paper_HR.pdf">white paper</a> for “levelling-up” the UK’s regions – an effort to ensure that it makes “good business sense for the private sector to invest in areas that have for too long felt left behind”, according to the Prime Minister’s foreword.</p>
<p>Taking climate change seriously offers the UK a way to do just that: diversifying the UK economy and in doing so, shifting the focus from London. But despite its rhetoric, the Conservative government is ignoring this historic opportunity.</p>
<figure class="align-center ">
<img alt="A view of London's skyline from the south side of the Thames." src="https://images.theconversation.com/files/445082/original/file-20220208-15-10vhezp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/445082/original/file-20220208-15-10vhezp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=332&fit=crop&dpr=1 600w, https://images.theconversation.com/files/445082/original/file-20220208-15-10vhezp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=332&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/445082/original/file-20220208-15-10vhezp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=332&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/445082/original/file-20220208-15-10vhezp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=418&fit=crop&dpr=1 754w, https://images.theconversation.com/files/445082/original/file-20220208-15-10vhezp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=418&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/445082/original/file-20220208-15-10vhezp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=418&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Britain’s golden goose?</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/long-exposure-panoramic-view-london-cityscape-714957370">I Wei Huang/Shutterstock</a></span>
</figcaption>
</figure>
<p>Let’s consider one example. Replacing gas boilers with electric heat pumps and upgrading all home insulation in line with the recommendations of the government’s official <a href="https://www.theccc.org.uk/wp-content/uploads/2020/12/The-Sixth-Carbon-Budget-The-UKs-path-to-Net-Zero.pdf">climate change advisor</a> (the Climate Change Committee) could create between <a href="https://www.ukonward.com/reports/greening-the-giants/">900,000 and 1.3 million jobs</a>, dispersed across every village, town and city in the UK. </p>
<p>The stable geology and empty, well-explored oil reservoirs beneath the North Sea make for one of the best places in the world for <a href="https://theconversation.com/carbon-capture-and-storage-where-should-the-world-store-co-its-a-moral-dilemma-167453">long-term carbon storage</a>. The UK could be a part of the <a href="https://www.ft.com/content/195bb547-8b01-4c99-a789-f77e8b779620">global race</a> to invest in this and other low-carbon industries like green steel, but <a href="https://ca1-eci.edcdn.com/reports/ECIU_stuck_starting_line.pdf?v=1621866013">it’s not</a>.</p>
<p>Investing in low-carbon industries would allow regions to draw on their own unique advantages and find new growth models to replace lost industry. There are already fledgling examples. Cornwall is exploring its potential as a <a href="https://www.theguardian.com/environment/2021/jul/01/full-steam-ahead-for-cornwalls-geothermal-energy-project">geothermal energy hub</a> thanks to a geological endowment of hot granite. </p>
<p>With the right support, the UK’s declining steel industry could be retooled to outfit an expanding wind energy sector with low-carbon steel, allowing more places to follow the path of Humberside where the offshore wind boom has <a href="https://www.bbc.co.uk/news/uk-england-humber-56127541">revived manufacturing</a>. </p>
<h2>Missed opportunities</h2>
<p>Climate change didn’t even get a mention in the <a href="https://www.gov.uk/government/news/government-unveils-levelling-up-plan-that-will-transform-uk">announcement</a> accompanying the launch of the government’s levelling-up proposals. In the white paper itself, the transition to a net zero economy came second from bottom in a list of 16 priorities. </p>
<p>The result is that chances for regional investment are squandered. Take the UK steel industry. In a prior policy announcement the government promised to “<a href="https://www.gov.uk/government/publications/industrial-decarbonisation-strategy">consider the implications</a>” of expert recommendations that steelmaking should be <a href="https://www.theccc.org.uk/wp-content/uploads/2020/12/Sector-summary-Manufacturing-and-construction.pdf">carbon-neutral by 2035</a>. But no money will flow from the government’s own clean steel fund, announced in 2019, until 2023. Meanwhile, the UK steel industry is <a href="https://committees.parliament.uk/committee/365/business-energy-and-industrial-strategy-committee/news/158691/government-must-act-to-support-crisishit-uk-steel-industry/">foundering</a>. </p>
<p>The government could have delivered on its net zero agenda and levelling-up proposals simultaneously by bringing forward investment in a green steel manufacturing boom. This would enrich the regions of Wales and northern England where Britain’s steel industry was first forged.</p>
<figure class="align-center ">
<img alt="A distant offshore windfarm." src="https://images.theconversation.com/files/445086/original/file-20220208-13-18zl2xo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/445086/original/file-20220208-13-18zl2xo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=298&fit=crop&dpr=1 600w, https://images.theconversation.com/files/445086/original/file-20220208-13-18zl2xo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=298&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/445086/original/file-20220208-13-18zl2xo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=298&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/445086/original/file-20220208-13-18zl2xo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=374&fit=crop&dpr=1 754w, https://images.theconversation.com/files/445086/original/file-20220208-13-18zl2xo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=374&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/445086/original/file-20220208-13-18zl2xo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=374&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Wanted: low-carbon steel.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/wind-turbines-sea-offshore-power-farm-1721667865">NAPA/Shutterstock</a></span>
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<p>The levelling-up white paper instead lays out a set of “missions” for addressing regional inequalities which include increasing pay and productivity across the country, ensuring 200,000 more people are completing high-quality skills training annually, and making the connectivity of transport systems nationwide more similar to London by 2030.</p>
<p>The funding for these missions encompasses a dizzying array of separate pots of money, some of which had already been announced: £26 billion in capital investment for the net zero transition, £5 billion for buses and active travel, and £3.8 billion for skills training were all in the <a href="https://www.gov.uk/government/publications/autumn-budget-and-spending-review-2021-documents">2021 Autumn Budget</a>. Failing to supplement this funding leaves both the UK’s climate targets and levelling-up agenda in doubt.</p>
<p>The most promising part of the plan let regions apply for new devolved powers from central government. Around <a href="https://www.climateemergency.uk/blog/list-of-councils/">three-quarters</a> of local authorities have declared climate emergencies and many have been <a href="https://www.lgcplus.com/politics/governance-and-structure/citizens-assemblies-a-new-dawn-for-democracy-02-01-2020/">working with residents</a> to develop climate plans. Devolving more powers to let people decide what direction their regions should take makes sense. But the newly announced funding to support this devolution must be considered against over a decade of cuts to <a href="https://www.localgov.co.uk/Mind-the-gap-between-levelling-up-rhetoric-and-reality-think-tank-warns-/53551">local authority budgets</a>. </p>
<p>An alternative approach would have been to marry the government’s climate change responsibilities with the levelling-up agenda. Be they decarbonising home heating, becoming a world leader in green steel production or addressing emissions from UK agriculture, these objectives could have directed investment towards specific regions and structured support for education and skills. </p>
<p>Such a move would have helped reassure local authorities, private businesses and young people making decisions about further education and training that the government is firmly behind achieving net zero. </p>
<p>Re-orienting the UK’s economic model away from the current finance-centred model that benefits London at the expense of the rest of the country is a Herculean task. But yoking together a programme of radical climate action, regional development, and genuine devolution offers a blueprint for achieving it. The Conservatives have begun gesturing towards such a programme, but their levelling-up proposals show they have much further to go.</p>
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<img alt="Imagine weekly climate newsletter" src="https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p class="fine-print"><em><span>Jacob Ainscough does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Behind the government’s net zero bluster there has been little progress in decarbonising the UK.Jacob Ainscough, Senior Research Associate in Environmental Governance, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1703262021-12-01T16:29:36Z2021-12-01T16:29:36ZBevis Marks: Britain’s oldest synagogue is central to London’s history – here’s why it needs protecting<p>At 320 years old, Bevis Marks in London is <a href="https://discovery.ucl.ac.uk/id/eprint/10071618/1/article%206.pdf">the oldest continually functioning synagogue</a> in Europe. So it is perhaps unsurprising that recent plans to erect two (very tall) skyscrapers overshadowing the building have led to <a href="https://www.nytimes.com/2021/08/31/world/europe/london-bevis-marks-synagogue.html?searchResultPosition=1">angry opposition</a>.</p>
<p>One 48-story tower, planned to be built in nearby Bury Street, <a href="https://www.jpost.com/diaspora/london-rejects-48-story-skyscraper-threatening-uks-oldest-synagogue-684740">was rejected</a> in early October on the grounds that it would severely disrupt the use of the Grade I-listed historic site. A groundswell of protest, led by the likes of Chief Rabbi Ephraim Mirvis and historians Tom Holland and Simon Schama, voiced concerns about how the shadow from the proposed tower would affect the synagogue’s spiritual power. </p>
<p>Another 21-story highrise, meanwhile, planned on Creechurch Lane, is still under consideration.</p>
<p>For Jews in many countries, Bevis Marks stands as the equivalent of a <a href="https://theconversation.com/notre-dame-de-paris-from-searing-emotion-to-the-future-rebirth-of-a-world-heritage-site-115612">world heritage</a> site. For British Jews, it is their prime heritage asset. It was built in 1701 by the Spanish & Portuguese Jews Congregation, in close proximity to the Bank of England and the Mansion House (the official residence of the lord mayor of London).</p>
<p>Beyond its architectural value, the building speaks to a history of London in which British Jews fought for civil and political rights as non-Christian citizens, thereby paving the way for other religious minorities.</p>
<h2>Jewish presence</h2>
<p>As historian David Knyaston demonstrates in his book The City of London, Jews and Jewish businesses played a critical part in London’s evolution as a global financial and commercial centre. However, this history occupies no place in the British national narrative, which overwhelmingly associates Jews with the mass immigration from eastern Europe after 1880, and the influx of <a href="https://theconversation.com/the-1938-kindertransport-saved-10-000-children-but-its-hard-to-describe-it-as-purely-a-success-107299">refugees</a> fleeing the Nazis during the 1930s and 1940s. </p>
<p>Besides Bevis Marks, there is now little trace of the historic Jewish presence in the City. Yet, it is the <a href="https://www.jstor.org/stable/29780070">cathedral synagogue</a> of British Jewry. It reminds us that Britain’s history as a place of refuge for Jewish immigrants dates back to Oliver Cromwell, who first allowed Jews <a href="https://www.jstor.org/stable/29779867">to return</a> to the country after <a href="https://www.jstor.org/stable/1453793">their expulsion in 1290</a>. </p>
<p>The earliest arrivals were Sephardic Jews whose ancestors had fled the Iberian peninsula <a href="https://www.jstor.org/stable/651019">after their expulsion</a> from <a href="https://theconversation.com/antisemitism-how-the-origins-of-historys-oldest-hatred-still-hold-sway-today-87878">Spain</a> in 1492. In time they were joined by Ashkenazi Jews from central Europe. Bevis Marks’ construction <a href="https://www.apollo-magazine.com/bevis-marks-synagogue-london-developers-threat/">drew inspiration</a> both from the Christopher Wren churches in London and from the Great Synagogue in Amsterdam.</p>
<p>A new era of financial capitalism, centred on London, began at the turn of the 19th century. And as <a href="https://www.jstor.org/stable/10.1086/ahr.110.3.631">our research has shown</a>, Jews forged alliances with Quakers and Catholics to build inclusive businesses such as Alliance Assurance. </p>
<p>Together, they campaigned for an end to the legal restrictions that beset non-Anglican groups and prevented them from participating fully in British economic, social and political life. The repeal of the Test and Corporation Acts in 1828 brought relief for Protestant dissenters. Then came Catholic emancipation in 1829. In the 1830s, the House of Commons began to vote in favour of Jewish emancipation. Dominated by Tory aristocrats and bishops, the House of Lords voted against. </p>
<p>The place of Jews in the City and the support they received within it proved critically important in this context. It was here, <a href="https://cdn.southampton.ac.uk/assets/imported/transforms/content-block/UsefulDownloads_Download/00DF7905E3C143AAB9B0D831196052B5/UNISn4296%20Parkes%20AR%20201314.AW.1.6.ONLINE.pdf">as scholar James Parkes recounts</a>, that businessman David Salomons became the first Jewish Sheriff (in 1835), Alderman (in 1847) and Lord Mayor (in 1855). </p>
<p>And it was the City that <a href="https://www.rothschildarchive.org/collections/rothschild_faqs/rothschilds_in_politics">elected</a> the Jewish businessman Lionel de Rothschild an MP in 1847, creating an protracted crisis of democratic accountability. Rothschild was, for over ten years, unable to take up his seat in parliament because he refused to swear an explicitly Christian oath.</p>
<p>Later, after Jews achieved <a href="https://www.jstor.org/stable/29777970">emancipation in 1858</a>, their presence at the heart of the City paved the way for other groups. In 1873, Sir Albert Sassoon –- a Jew born in Baghdad and brought up in Mumbai –- became the first Indian to receive the Freedom of the City of London, an ancient honour and an entitlement to civil privileges, heralding a new phase of diversification.</p>
<h2>Hidden legacy</h2>
<p>In the 19th century, Londoners knew and valued this history. When Salomons’s brother Philip gave 400 volumes of Hebrew and rabbinical texts to the Guildhall library, he was effectively <a href="https://www.sothebys.com/en/articles/philip-salomons">inscribing Jews</a> into the City’s historic collections and underlining the relevance of Jewish culture in this world. Later, in the 1880s, Londoners of different faiths <a href="https://www.apollo-magazine.com/bevis-marks-synagogue-london-developers-threat/.">fought to preserve Bevis Marks</a> from an attempt to relocate the synagogue to Maida Vale, in what was one of the earliest examples of a public campaign of this kind. </p>
<p>In 1978, when a site in neighbouring Creechurch Lane was up for development, the City of London actively protected Bevis Marks. Its planners insisted on a redesign of the proposed building to ensure the fourth floor would be set back from the frontage overlooking its courtyard, thus allowing more light to enter the synagogue and its immediate setting. </p>
<p>Bevis Marks is now <a href="https://www.cityoflondon.gov.uk/things-to-do/architecture/city-churches-and-religious-buildings">the only site of Jewish memory</a> in the City because it is the only non-Christian place of worship in the Square Mile. But the built environment is always changing and, increasingly, growing taller. </p>
<p>One tall building has been approved on nearby Leadenhall Street. In early October, however, the City’s <a href="https://www.youtube.com/watch?v=rmwaGeGkTMM">Planning and Transportation Committee</a> threw out plans for another on Bury Street, close to the synagogue, on <a href="https://democracy.cityoflondon.gov.uk/ieListMeetings.aspx?CommitteeId=143">heritage grounds</a>. It was the first time in years that the committee had rejected the recommendation of its planning officers with such a resounding majority. </p>
<p>Proposals for a second, substantially more damaging building at 33 Creechurch Lane – only 3.5 metres from the synagogue’s cathedral window - <a href="https://www.planning2.cityoflondon.gov.uk/online-applications/applicationDetails.do?activeTab=documents&keyVal=P6CS6TFHM6V00">are due</a> to be considered early next year. </p>
<p>The <a href="https://www.cityoflondon.gov.uk/assets/Services-Environment/planning-local-plan-adopted-2015.pdf">City of London’s Local Plan</a>, drawn up in 2015 specifies the importance of sustaining and enhancing heritage assets, their settings and significance. The significance of Bevis Marks is entwined with the fact that it remains a living religious community in the heart of a dynamic commercial space. </p>
<p><em>This article was amended to clarify that it was Sir Albert Sassoon, and not Alfred, who became the first Indian to receive the Freedom of the City of London.</em></p><img src="https://counter.theconversation.com/content/170326/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Abigail Green receives funding from the Arts and Humanities Research Council (AHRC grant number AH/S006656/)</span></em></p><p class="fine-print"><em><span>Jaclyn Granick receives funding from the Arts and Humanities Research Council. (grant number AH/S006656/)
</span></em></p>Bevis Marks – the cathedral synagogue of British Jewry – is one of the few remaining traces of the historic Jewish presence in the City of London. As a national heritage site, it has no parallels.Abigail Green, Professor of Modern European History, University of OxfordJaclyn Granick, Lecturer in Modern Jewish History, Cardiff UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1546242021-02-08T13:27:55Z2021-02-08T13:27:55ZFinancial services: how London can take advantage of Brexit to become more successful<figure><img src="https://images.theconversation.com/files/382571/original/file-20210204-14-7ln8gq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">City limits?</span> <span class="attribution"><a class="source" href="https://unsplash.com/photos/gujCA6GquHs">Jack Gibson</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>In the weeks since the Brexit free-trade deal <a href="https://www.bbc.com/news/uk-politics-55435930">was announced</a> on December 24, people in the UK have been coming to terms with the fact that “free” <a href="https://www.bbc.co.uk/news/business-55752541">does not mean</a> completely free. But while much of the focus has been on the Northern Irish border and the row over vaccines, the financial services sector, centred around the City of London, is also going through substantial upheaval.</p>
<p>The sector contributed <a href="https://commonslibrary.parliament.uk/research-briefings/sn06193/">£132 billion</a> or 7% of the UK economy in 2019 and <a href="https://www.statista.com/statistics/298370/uk-financial-sector-total-financial-services-employment/">employs over 1 million</a> people, half of them in banking. It came out of the talks with what is essentially a “no deal”, since services were not covered at all. </p>
<p>During the announcement, the UK prime minister, Boris Johnson, said that the deal “perhaps does not go as far as we would like” for financial services. This was primarily a reference to “equivalence”, which is the way that EU regulators grant market access to firms from a country outside the bloc, on the basis of deciding that the financial rules are similar to their own (and will remain so). </p>
<p>There was no such commitment to equivalence in the deal – only a memorandum of understanding that talks would stay open and there would be an agreement on financial services regulation by March 31 that would hopefully include equivalence. The City of London <a href="https://www.cityam.com/city-of-london-lobby-urges-eu-to-grant-uk-financial-services-firms-widespread-access-to-its-markets/">has been calling on</a> Brussels to grant equivalence in these negotiations, but there is not much optimism that it will happen either in that timeframe or in any comprehensive way. </p>
<p>One major consequence is that UK financial institutions must trade euro-denominated shares and bonds from within the euro-bloc. Some temporary measures are in place to keep trades moving, such as the UK’s Financial Conduct Authority <a href="https://www.fca.org.uk/news/statements/temporary-transitional-power-derivatives-trading-obligation">allowing UK companies</a> to trade EU derivatives until June, but this business will also probably be lost after that. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/382575/original/file-20210204-22-1mix9ls.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Shot of City of London from a distance" src="https://images.theconversation.com/files/382575/original/file-20210204-22-1mix9ls.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/382575/original/file-20210204-22-1mix9ls.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/382575/original/file-20210204-22-1mix9ls.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/382575/original/file-20210204-22-1mix9ls.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/382575/original/file-20210204-22-1mix9ls.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/382575/original/file-20210204-22-1mix9ls.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/382575/original/file-20210204-22-1mix9ls.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Jobs are going, but there are no signs of an exodus.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/m90xK4akjyo">Lauris Rozentals</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>One estimate from October 2020 <a href="https://www.ey.com/en_uk/news/2020/09/ey-financial-services-brexit-tracker-fs-firms-continue-moving-staff-ahead-of-brexit-deadline">suggested that</a> even back then, £1.2 trillion in assets and 7,500 jobs had been moved in anticipation of what was to come. On <a href="https://www.ft.com/content/a434b756-afe0-454d-9d70-ef2d42ea8d55">the first day</a> that trading shifted back to continental bourses on January 1, the volume amounted to nearly €6 billion (£5.3 billion). </p>
<p>There are still no signs of a mass exodus, however. For example, Deutsche Bank <a href="https://www.ft.com/content/3eaac146-e140-490b-9c97-73e026b7dc13">initially suggested</a> that it may move up to 4,000 jobs to Frankfurt, but now that number looks more likely to be in the low hundreds. This could reflect a “wait-and-see” approach from financial institutions, or perhaps the benefits of being part of a cluster with a large support network of lawyers, accountants, risk specialists and so on, whose practices have evolved over decades to become world class. </p>
<p>Nonetheless, jobs relocated due to lack of equivalence are unlikely to come back if it is granted for particular market segments later, because routines and practices become settled. This could combine with the prospect of the “all-in-one-place” benefits of locating in London being diminished by the pandemic – if Zoom meetings are <a href="https://theconversation.com/five-charts-that-reveal-how-remote-working-could-change-the-uk-154418">increasingly the norm</a>, is being part of a cluster of connected businesses in one area still as important? </p>
<h2>Professional strengths</h2>
<p>But it’s not all bad news. One major City segment unaffected by Brexit is currency trading. While shares and bonds usually trade in the market where they are issued, currency trading takes place globally – mostly involving US dollar pairs, followed by pairs involving the euro and yen. </p>
<p>The UK <a href="https://www.bis.org/statistics/rpfx19.htm">has 43%</a> of the global forex market, and this has increased by six percentage points in three years. The next highest is the US, with 16.5% and declining, while the Asian centres of Japan, Hong Kong and Singapore have predominantly been static. </p>
<p>In forex, London has several important advantages. The location and timezone are a midpoint between the US and Asia. It has scale in having <a href="https://colresearch.typepad.com/colresearch/2018/06/banks-in-the-city-and-across-the-uk.html">such a significant number</a> of international banks in one city, plus the network of supporting services. By comparison, EU expertise is scattered among centres such as Amsterdam, Frankfurt and Dublin. London also has the <a href="https://www.ft.com/content/f0a2dc6e-0263-11e7-ace0-1ce02ef0def9">infrastructure required</a> for state-of-the-art high-frequency trading, not least the transatlantic cabling landing stations and data centres.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/382582/original/file-20210204-16-56se4k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Two professionals working behind laptops" src="https://images.theconversation.com/files/382582/original/file-20210204-16-56se4k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/382582/original/file-20210204-16-56se4k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/382582/original/file-20210204-16-56se4k.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/382582/original/file-20210204-16-56se4k.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/382582/original/file-20210204-16-56se4k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/382582/original/file-20210204-16-56se4k.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/382582/original/file-20210204-16-56se4k.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">London’s finance cluster remains hard to beat.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/5fNmWej4tAA">Scott Graham</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
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</figure>
<p>So London will probably continue to dominate this market, and is well placed to benefit from a likely rise in the trade in emerging markets currencies. Their total trade <a href="https://www.bis.org/statistics/rpfx19.htm">now exceeds the yen</a>, with the Chinese remnimbi the largest. Outside Hong Kong, more remnimbi are traded in London than anywhere else – more than £300 billion worth in 2019. London has also seen an increase in the issuance of remnimbi-denominated bonds issued outside of China (known as “dim sum bonds”). </p>
<p>In important areas like these, London will be competing much more with Asia than with Europe. London is also likely to continue to be a world leader in providing a place where disputes can be resolved and best practices can be monitored and maintained. </p>
<h2>The right approach to the future</h2>
<p>The pre-eminence in finance that London enjoys because of its cluster of specialists points to a vital issue as the UK emerges from Brexit: the key to the future is to maintain and enhance standards and regulatory oversight so that major firms continue to have confidence in London as a place to do business, resolve disputes and so on. Get this right and they will continue to invest.</p>
<p>No longer having to coordinate and agree with 27 EU countries should enable the UK to be more nimble in this regard, which could be a big advantage in attempting to corner emerging areas such as green investment and fintech. This could include developing and regulating new financial products that allow investors to positively engage with climate-change finance and cryptocurrencies. This would be a more beneficial approach to taking the financial sector forward than to focus on deregulation in a “<a href="https://www.thisismoney.co.uk/money/markets/article-9144307/Big-Bang-2-0-Radical-shake-planned-breathe-life-City-London.html">big bang 2.0</a>”. </p>
<p>The unavoidable reality is that financial services business and jobs will continue to be lost as a result of Brexit. But with a thoughtful, future-focused approach to managing the sector, there is also plenty of scope for it to rebound.</p><img src="https://counter.theconversation.com/content/154624/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David McMillan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The question now is, how to turn a crisis into an opportunity.David McMillan, Professor in Finance, University of StirlingLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1534862021-01-19T16:54:17Z2021-01-19T16:54:17ZBrexit: financial services face continued uncertainty – here’s why <figure><img src="https://images.theconversation.com/files/379264/original/file-20210118-23-1v0izht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">shutterstock</span> </figcaption></figure><p>Since the <a href="https://theconversation.com/so-parliament-gets-a-pre-brexit-vote-but-what-will-it-be-voting-on-68248">UK</a> voted to leave the EU, financial services has been largely absent from Brexit discussions. This is despite the fact that financial services are an important piece of the UK economy. They account for around <a href="https://www.cityoflondon.gov.uk/supporting-businesses/economic-research/research-publications/city-statistics-briefing">around 10%</a> of total tax receipts in the UK and <a href="https://www.ons.gov.uk/businessindustryandtrade/internationaltrade/bulletins/internationaltradeinservices/2018">40% of</a> the financial services sector’s exports go to the EU.</p>
<p>Furthermore, as soon as the then UK prime minister <a href="https://theconversation.com/theresa-may-confirms-itll-be-a-hard-brexit-heres-what-that-means-for-trade-71417">Theresa May</a> announced that Brexit would mean the end of free movement between the UK and the EU, it was clear that UK financial services would face significant changes to their EU operations as a result of Brexit.</p>
<p>Most notably, financial services firms knew that from January 1 they would lose their <a href="https://theconversation.com/london-banking-will-struggle-to-escape-brexit-trap-61929">passporting</a> rights, which allowed them to sell their services into the EU from their UK base without the need for additional regulatory clearance.</p>
<h2>Goodbye passporting, hello equivalence</h2>
<p>The EU-UK Trade and Cooerpation Agreement (TCA) does not, and was not designed to, provide a substitute for the EU market access available to UK firms through passporting. In a document stretching to over 1,200 pages, only four and a half focus on financial services. </p>
<p>In order to access the single market, UK based financial services firms now have to either comply with the regulatory requirements for market access set at the level of individual member states or rely on equivalence decisions. Equivalence is an EU system that gives single market access to financial firms in third countries such as the UK if their home rules are considered by Brussels to be “equivalent” to, or as robust as, regulation in the bloc.</p>
<figure class="align-center ">
<img alt="Senior executive hand holding UK passport against blurred background of world globe and camera" src="https://images.theconversation.com/files/379284/original/file-20210118-15-1ux4gs7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/379284/original/file-20210118-15-1ux4gs7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=361&fit=crop&dpr=1 600w, https://images.theconversation.com/files/379284/original/file-20210118-15-1ux4gs7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=361&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/379284/original/file-20210118-15-1ux4gs7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=361&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/379284/original/file-20210118-15-1ux4gs7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=454&fit=crop&dpr=1 754w, https://images.theconversation.com/files/379284/original/file-20210118-15-1ux4gs7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=454&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/379284/original/file-20210118-15-1ux4gs7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=454&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Equivalence doesn’t provide the same degree of certainty as passporting.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/senior-executive-hand-holding-uk-passport-789443077">Steve Heap/Shutterstock</a></span>
</figcaption>
</figure>
<p>Neither is a like-for-like replacement for the common EU-wide market access the UK had through passporting. Seeking permissions on a state-by-state basis will add complexity and hence costs for financial services firms.</p>
<p>Relying on equivalence brings changes in UK-EU financial services trade because it does not cover the same range of financial activities as passporting. </p>
<p>Retail banking services, including lending, payments and deposit taking are not included, for example. Neither does equivalence provide the same degree of certainty as passporting because the EU can remove equivalence determinations with 30 days’ notice.</p>
<p>One of the most significant causes of uncertainty currently for UK financial services is when and if equivalence determinations might be taken by the EU. In the <a href="https://www.gov.uk/government/publications/new-withdrawal-agreement-and-political-declaration">2019 political declaration</a> that set out the framework for the future relationship between the EU and UK, both sides agreed to try to finalise their respective equivalence decisions by mid-2020, but the deadline was not met.</p>
<p>The EU has adopted a cautious approach to equivalence since then. It has only made two time-limited equivalence decisions in areas of strategic importance for the EU (derivatives clearing and the settling of Irish securities).</p>
<h2>The way ahead</h2>
<p>Equivalence decisions were not formally part of UK-EU trade negotiations. However, during the negotiations it was expected that a deal would have made equivalence more likely than under a no-deal scenario. </p>
<p>There is evidence in the deal that this is true. The European Commission has <a href="https://ec.europa.eu/info/sites/info/files/eu-uk_trade_and_cooperation_agreement-a_new_relationship_with_big_changes-brochure.pdf">identified</a> future equivalence decisions as one of a number of unilateral EU measures available to the EU within a wider set of “pillars of cooperation” between the UK and the EU.</p>
<p>Under the terms of the TCA, the UK and the EU have committed to agreeing a <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/948093/TCA_SUMMARY_PDF.pdf">Memorandum of Understanding</a> relating to financial services regulation by March. This is likely to cover issues related to financial market stability alongside the outstanding equivalence issues. As such, whilst the UK’s financial services sector is now trading outside the single market, negotiations are continuing on how it will trade with the EU in the future. </p>
<figure class="align-center ">
<img alt="Close up view of British currency GBP - One Pound coin balancing on its edge in the centre of the logo of the European Union." src="https://images.theconversation.com/files/379481/original/file-20210119-18-10pa6dr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/379481/original/file-20210119-18-10pa6dr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/379481/original/file-20210119-18-10pa6dr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/379481/original/file-20210119-18-10pa6dr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/379481/original/file-20210119-18-10pa6dr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/379481/original/file-20210119-18-10pa6dr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/379481/original/file-20210119-18-10pa6dr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Financial services jobs have moved from London to the EU.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-uk-april-2019-close-view-1360294616">Ceri Breeze/Shutterstock</a></span>
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</figure>
<p>However, there is little evidence that equivalence decisions are forthcoming. The EU has <a href="https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_2532">reiterated</a> that it will not rush equivalence determinations. Indeed, as time passes, in many ways the prospects for EU equivalence determinations diminish. </p>
<p>Equivalence can be thought of as a perishable good. As firms begin to operate without it by, for example, moving assets, activities or employees out of London to other European financial centres, so the potential for these corporate decisions to be reversed diminishes if an equivalence determination is made. </p>
<p>For example, there has been a large shift in Euro-denominated share trading from London to European financial centres such as Paris and Amsterdam since January 1 2021. This has been an area of financial services activity that London has historically dominated within Europe. Financial services jobs have also been moved from London to the EU, although the rate has been lower than many anticipated. Firms are currently awaiting the outcome of current EU-UK negotiations on the future of financial services before making a final decision about where to base their operations.</p>
<p>Additionally, part of the EU’s caution in granting equivalence reflects its desire to learn more about the UK’s plans for any possible divergence from EU regulation after Brexit. This is a key domestic policy question for the UK <a href="https://www.ft.com/content/1a2c7e3d-2bd9-4f9c-90c1-0732df98488e">currently</a>. </p>
<p>Brexit centred, in many ways, around a desire to “take back control”. But little is currently known about how this new found control will be exercised in financial services. The outcome of negotiations surrounding regulatory cooperation and EU decisions on equivalence due in 2021 should be watched closely as these will be central in determining what Brexit means in practice for financial services.</p><img src="https://counter.theconversation.com/content/153486/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sarah Hall receives funding from the Economic and Social Research Council. She is a Senior Fellow at the UK in a Changing Europe.</span></em></p>The UK’s financial services sector has been planning for a considerably reduced market access.Sarah Hall, Professor of Economic Geography, University of NottinghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1232172019-09-11T12:00:07Z2019-09-11T12:00:07ZA no-deal Brexit won’t end the uncertainty for business<figure><img src="https://images.theconversation.com/files/291806/original/file-20190910-190016-ywgm7w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/69057297@N04/44461344780">ChiralJohn/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>It’s very difficult to say what’s going to happen with Brexit right now. The prime minister, Boris Johnson, has said he’d rather “die in a ditch” than ask for a Brexit delay. Yet that’s what MPs are pushing for him to do. And now parliament is suspended for five weeks.</p>
<p>For businesses, this uncertainty over the UK’s future relationship with the EU is taking its toll. But the idea that leaving without a deal on October 31 will end this uncertainty is a false one. It will just make things even more uncertain.</p>
<p>The Bank of England’s <a href="https://www.bankofengland.co.uk/working-paper/2019/the-impact-of-brexit-on-uk-firms">latest survey of UK firms</a> details the high level of uncertainty introduced by the Brexit process since the referendum of June 2016. It found that 50% of firms considered Brexit to be one of their top three drivers of uncertainty. It also found that uncertainty has increased substantially after the September 2018 Salzburg summit, when the EU rejected the UK’s Brexit plan and which led to the extension from March 31 to October 31. Moreover, since June 2016 investment fell by 11%, whereas the fall in productivity ranged from 2% to 5%. </p>
<p>On this basis, one could argue that exiting the EU with or without a deal is paramount, as it will settle the matter for the benefit of the British people and companies. While this may be true for people, it will not be the case for business.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1169650678035206144"}"></div></p>
<p>A no-deal Brexit means that Britain will revert to WTO rules to trade with the EU and the rest of the world. This means import duties and various controls on trade, which economists at LSE’s Centre for Economic Performance <a href="http://cep.lse.ac.uk/pubs/download/brexit08_book.pdf">estimate</a> could reduce trade with the EU by as much as 40% over ten years. </p>
<p>This is because some 44% of all UK exports go to the EU <a href="https://fullfact.org/europe/uk-eu-trade/">and 53% of all UK imports come from the EU</a>, with 30% of UK food <a href="https://www.theguardian.com/politics/ng-interactive/2019/aug/13/how-a-no-deal-brexit-threatens-your-weekly-food-shop">coming from the EU</a>. A deal would allow all of this trade to continue freely. As trade deals take years to negotiate, a no-deal Brexit would mean lots more uncertainty ahead.</p>
<h2>Financial trouble</h2>
<p>An even bigger reason why uncertainty will persist after October 31 if there’s a no-deal Brexit is to do with the UK economy’s reliance on the finance industry. Manufacturing, once a powerful component of the country’s GDP, has fallen <a href="https://data.worldbank.org/indicator/NV.IND.MANF.ZS?locations=GB">to below 9%</a> of UK GDP. </p>
<p>Britain’s financial centre, known as the City of London, is the largest financial hub in the world and employs more than 2.2m people, if you include all the related professions and services that are dependent on the City <a href="https://www.thecityuk.com/assets/2016/Reports-PDF/463922c146/Key-facts-about-UK-financial-and-related-professional-services-2016.pdf">and spread across the country</a>. The uncertainty affecting financial firms is of a different type than that of other businesses. </p>
<p>The first reason for this is to do with the nature of investment banking and trading of currencies, equities and derivatives. Some £40 to £50 billion of these types of services relate to EU markets, whereas some £55 to £65 billion are truly global <a href="https://www.ft.com/content/3a35dfd6-b2cd-11e9-8cb2-799a3a8cf37b">and do not depend on the EU</a>. So nearly 50% of trading exchange is conducted in euros and the City of London is the largest hub in the world for euro-trading and various currency swaps. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/291803/original/file-20190910-190021-4mm4pm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/291803/original/file-20190910-190021-4mm4pm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/291803/original/file-20190910-190021-4mm4pm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/291803/original/file-20190910-190021-4mm4pm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/291803/original/file-20190910-190021-4mm4pm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/291803/original/file-20190910-190021-4mm4pm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/291803/original/file-20190910-190021-4mm4pm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The City looms large over the UK economy.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-city-uk-175977128?src=HspUgXI-LG1n3p-36_zZKA-1-1">Shutterstock</a></span>
</figcaption>
</figure>
<p>A no-deal Brexit would mean that the City would – overnight – be subject to restrictions and trade in services would no longer benefit from the free movement principle. Until things settle for Britain’s financial hub, which means consolidating a global and non-EU dependent financial and banking network, uncertainty will persist for the foreseeable future. </p>
<h2>Toxic fights</h2>
<p>A longer-term issue for the City relates to the protracted friction between it and Brussels over their different approaches to regulation. UK regulations are limited and concern mainly some fundamental ring-fencing legislation, which requires each large UK bank to separate its retail banking activity from the rest of its business. EU regulations, on the other hand, are many and rather rigid, covering market abuse, LIBOR, solvency rules for insurers, payment services – the list goes on.</p>
<p>Hedge funds, although not the bulk of the City’s trade and activity, are extremely hostile to EU regulation because their trading is global, mostly in Asia. And, while the City as a whole aims to diversify trading relations <a href="https://blogs.lse.ac.uk/europpblog/2016/03/18/the-city-and-the-eu-there-are-clear-divisions-in-the-uks-financial-services-sector-over-a-brexit/">and boost business with Asia</a>, the EU’s aim is to develop its own self-reliant and integrated market, <a href="https://ec.europa.eu/info/business-economy-euro/banking-and-finance_en">based on large amounts of regulation</a>. This is typical of Germany’s “social market economy” model, which combines free market capitalism with regulation and discipline to ensure fair competition and social policies, and <a href="https://journals.sagepub.com/doi/abs/10.1177/0896920519835008?journalCode=crsb">has been transplanted across the EU</a>. </p>
<p>Here lies the reason for <a href="https://www.bloomberg.com/opinion/articles/2019-05-24/brexit-let-the-city-of-london-fight-it-out-with-the-eu">toxic fights</a> between the UK and the EU over the “passporting rights” which allow City firms to freely trade their services across the EU. A deal would have meant a transition period where UK firms continue to enjoy these rights and trade could continue without any new barriers. </p>
<p>With no deal in place, the UK will be treated like a non-member. What’s more, new negotiations would have to begin to determine future trade structures. Not only will this take time, it is likely that the EU would force tougher regulation on the UK to regain its free trade in services.</p>
<p>Thus, uncertainty and tension between the UK and the EU will continue in the event of a no-deal Brexit. Meanwhile, it is clear to us that both sides have a vested interest in reaching a deal that respects the UK’s June 2016 referendum result and maintains economic and social stability in the UK and beyond.</p><img src="https://counter.theconversation.com/content/123217/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A no-deal Brexit means the immediate imposition of import duties and various controls on UK-EU trade.Vassilis K. Fouskas, Professor of International Politics & Economics, University of East LondonShampa Roy-Mukherjee, Senior Lecturer in Macroeconomics and Applied Econometrics, University of East LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1112212019-02-07T12:25:29Z2019-02-07T12:25:29ZShould I stay or should I go? Brexit is forcing City firms to make some tough decisions<figure><img src="https://images.theconversation.com/files/257701/original/file-20190207-174861-1a5x7f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/canary-wharf-large-business-shopping-development-87531808?src=m31XRRPCExjvbsg1CX_lIw-1-2">QQ7/Shutterstock</a></span></figcaption></figure><p>The City of London has <a href="https://www.theguardian.com/business/nils-pratley-on-finance/2019/jan/30/so-just-when-exactly-will-the-city-press-the-no-deal-panic-button">not been as vocal</a> as other industry sectors during the Brexit negotiations, but it is perceived to be dissatisfied. The UK’s future relationship with the EU remains unclear – and if there’s one thing most businesses do not like it’s <a href="https://theconversation.com/brexit-why-uncertainty-is-bad-for-economies-64334">uncertainty</a>. This is why the City broadly <a href="https://www.theguardian.com/politics/2018/nov/26/business-leaders-rally-behind-mays-brexit-deal-amid-fears-of-crashing-out">approves of</a> Theresa May’s <a href="https://theconversation.com/brexit-draft-withdrawal-agreement-experts-react-107027">withdrawal agreement</a>. At the very least, it stops Britain crashing out of the EU without a deal on March 29.</p>
<p>But, with UK politicians <a href="https://theconversation.com/brexit-deal-flops-theresa-may-survives-so-what-happens-now-109975">not signing off on this agreement</a>, uncertainty persists. And, as Brexit’s 11th hour creeps closer, we are able to see just how different financial firms are dealing with the UK’s impending departure from the EU. </p>
<p>Arguments as to the effects of Brexit on the City range from the <a href="https://www.politico.eu/article/brexit-the-city-of-london-is-already-dying/">catastrophic</a> to the <a href="https://www.centreforlondon.org/publication/the-london-intelligence-issue-6/">negligible</a>. Reams of data and statistics have been produced to illustrate these extreme positions and multiple standpoints in between. The effect has – predictably – been confusion. Is the City really threatened by Brexit or not? </p>
<p>Perhaps unsurprisingly, attitudes vary from firm to firm and the answer can be found by untangling the different aspects of City business. Firms dealing with managing the investments of wealthy international clients and funds <a href="https://www.bloomberg.com/opinion/articles/2018-04-30/banks-seem-oddly-unconcerned-about-brexit">are less affected</a> by a regulatory rupture between the UK and the EU. Yes, there may be some costs involved in moving funds around to meet regulatory requirements as they evolve, but there are also opportunities. </p>
<p>Regulatory and tax arbitrage – where firms capitalise on legal loopholes and inconsistent requirements in different countries – is how much of the City makes its money. So a new subdivision of systems and requirements within Europe would open up <a href="https://publications.parliament.uk/pa/ld201719/ldselect/ldeucom/66/66.pdf">opportunities</a> for savings and new products. The significant amounts of money involved in this aspect of the City’s business ensure that a great deal of the current financial structure will remain in place, no matter what shape Brexit eventually takes.</p>
<h2>Uneven movement abroad</h2>
<p>Other aspects of the City’s business are more <a href="https://www.pwc.co.uk/financial-services/assets/pdf/impact-of-brexit-on-fs-in-europe.pdf">vulnerable</a>. Losing the “passporting” rights that allow banks to ply their services across the EU means that those parts of the City engaged in insurance, commercial and retail banking will no longer be able to service their European clients. As much was admitted in the government’s no-deal preparation <a href="https://theconversation.com/no-deal-brexit-experts-on-what-the-uk-governments-advice-means-102074">notices</a>. And even if a Brexit deal is signed off before March 29, the loss will occur after the end of the transition period. </p>
<p>Subsequently, for the part of the City’s banking and insurance sectors that deal with what we call the real economy (standard retail clients and businesses) their business model is up in the air. The only safe solution is to relocate to an EU member state or wind down contracts they will not be able to service in the future.</p>
<p>This explains the uneven movement of City firms in response to Brexit. Some move funds and some of their people by establishing or augmenting a base in Europe. For example, <a href="https://www.bbc.co.uk/news/business-47060676">Barclay’s bank</a> recently obtained court approval to move a massive €190 billion fund to Ireland. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/257702/original/file-20190207-174870-1bado1k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/257702/original/file-20190207-174870-1bado1k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=389&fit=crop&dpr=1 600w, https://images.theconversation.com/files/257702/original/file-20190207-174870-1bado1k.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=389&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/257702/original/file-20190207-174870-1bado1k.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=389&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/257702/original/file-20190207-174870-1bado1k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=488&fit=crop&dpr=1 754w, https://images.theconversation.com/files/257702/original/file-20190207-174870-1bado1k.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=488&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/257702/original/file-20190207-174870-1bado1k.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=488&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Barclays’ London headquarters.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-october-2018-barclays-building-canary-1212345334?src=G5_HvEypN-mEopOAfQ2AjA-1-24">Willy Barton / Shutterstock.com</a></span>
</figcaption>
</figure>
<p>But this movement isn’t just in one direction – those firms that used to serve British clients from an EU location are now relocating to London. <a href="https://www.reuters.com/article/us-britain-eu-citigroup-uk/citi-plans-new-uk-bank-as-part-of-brexit-reorganization-idUSKCN1MF231">Citibank</a>, for example, is setting up a new British bank that will be headquartered in London to ensure it can service its retail clients in the UK after Brexit. Previously, this business was covered by its Citibank Europe headquarters in Dublin. Of course, the money involved reflects the relative strength and volume of the client base. This is why the movement away from the City makes headlines, while the opposite is primarily of interest to clients affected. </p>
<p>For other firms, changes brought about by Brexit are so fundamental that they no longer need to maintain a UK presence. Those will <a href="https://uk.reuters.com/article/us-eurozone-banks-ecb/ecb-takes-over-supervision-of-two-banks-leaving-uk-due-to-brexit-idUKKBN1OD0Z6">move</a> their regulated operations or <a href="https://www.independent.co.uk/news/uk/politics/brexit-jacob-rees-mogg-scm-ireland-city-move-eu-withdrawal-dublin-a8398041.html">relocate</a> the entirety of their funds, with Frankfurt, Paris and Dublin being the main <a href="https://www.politico.eu/article/jpmorgan-goldman-sachs-banks-finance-world-getting-on-with-exit-from-uk/">beneficiaries</a> in the field of financial services.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/ireland-is-in-prime-position-to-profit-from-brexit-relocations-77876">Ireland is in prime position to profit from Brexit relocations</a>
</strong>
</em>
</p>
<hr>
<p>A less-reported consequence of all this movement is that City firms might also be examining their <a href="https://newint.org/features/2018/11/19/will-brexit-break-investor-state-lawsuit-system">legal options</a> in terms of suing the British government for the losses incurred by relocations, or loss of market access. So far <a href="https://academic.oup.com/icsidreview/article/33/2/380/5004350">only a few have the jurisdiction</a> to sue – investors from countries that have signed some form of treaty with the UK that includes investor-state dispute settlement clauses. These will be primarily firms from outside Europe that had settled in the City in order to serve European clients, which may argue that the UK government’s handling of Brexit violated their legitimate expectations of moving to (and investing) in UK offices. But, depending on the extent of losses, and the final form of Brexit, lawyers are likely to be busy investigating.</p>
<p>Will there still be a City of London in April? The answer is yes. But it will be different, no matter which shape Brexit eventually takes. In markets, actions speak louder than words, and booming sales of <a href="https://www.bbc.co.uk/news/av/uk-england-leeds-46842937/hundreds-buying-brexit-box-amid-food-supply-fears">Brexit survival packs</a> are certainly not a good sign.</p><img src="https://counter.theconversation.com/content/111221/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ioannis Glinavos does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Some banks are moving their operations out of London. Others are moving in to serve British clients they might not be able to reach from the EU.Ioannis Glinavos, Senior Lecturer in Law, University of WestminsterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1049592018-10-15T13:11:34Z2018-10-15T13:11:34ZHave we reached peak London?<figure><img src="https://images.theconversation.com/files/240589/original/file-20181015-165905-1sqnxz3.jpg?ixlib=rb-1.1.0&rect=228%2C14%2C2267%2C1388&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/peterjcoughlan/28038508014/sizes/l">Peter J Coughlan/Flickr.</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>London has grown steadily for the past 30 years, in people, jobs and self confidence. Population growth has been driven both by in-migration (more people moving to London than moving away) and by natural change (more births than deaths). International migration – both EU and non-EU – has been a major factor in the city’s growth, outweighing domestic migration, where London has been <a href="https://www.centreforlondon.org/reader/the-london-intelligence-issue-5/#population">a net exporter</a> of people. </p>
<p>For some, London’s growth should be celebrated as evidence of its success as a global city: it’s a jobs machine; an economic powerhouse; a gateway to the UK; a generator of fiscal surpluses for the whole nation. For others, <a href="https://www.theguardian.com/commentisfree/2016/jan/28/london-dark-star-britain-control-success">London is a “dark star”</a>, draining the rest of the UK of people, talent, public spending and media attention. Its growth is seen as unnatural and unbalanced, leading to a large and increasing gap in opportunities, wealth and income between London and the rest of the UK. </p>
<p>These debates are familiar and entrenched – but perhaps they are becoming out of date. There are already some indications that London is at the edge of a major inflection point: could it be that, rather than continuing to grow, London is about to stall, or even go into decline?</p>
<h2>Prime and decline</h2>
<p>For much of the 20th century, London was in decline. After World War II, the city’s manufacturing and goods-handling economy faltered. Between 1966 and 1974, London’s manufacturing employment fell by 27% - a loss of <a href="http://journals.sagepub.com/doi/pdf/10.1080/713702294">390,000 jobs</a>. Planning and economic policy favoured dispersal, more balanced regional growth and the creation of New Towns and <a href="https://theconversation.com/what-is-a-garden-city-and-why-is-money-being-spent-on-building-them-44610">Garden Cities</a> outside of London. The capital’s population declined most rapidly in the 1970s: over the decade, the capital experienced a net loss of 740,000 people – that’s 10% of the city’s population.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/240595/original/file-20181015-165903-4eh7ci.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/240595/original/file-20181015-165903-4eh7ci.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/240595/original/file-20181015-165903-4eh7ci.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/240595/original/file-20181015-165903-4eh7ci.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/240595/original/file-20181015-165903-4eh7ci.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/240595/original/file-20181015-165903-4eh7ci.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/240595/original/file-20181015-165903-4eh7ci.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Welwyn Garden City: a more attractive option.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/welwyn-garden-city-uk-august-28-1086432290?src=1H2d0zf3f2nVEv0BEUopgA-1-0">AC Manley/Shutterstock.</a></span>
</figcaption>
</figure>
<p>Few, if any, commentators foresaw the change that came in the mid-1980s, as the long decline in both population and jobs slowed and then reversed. Sentiment began to shift; London began to look like a place to be, rather than a city to flee. The completion of the single market, freedom of movement and EU expansion helped London to develop a specifically European economic and cultural role, alongside its status as a global city. </p>
<p>Globalisation – the easier movement of people, goods, services, money and ideas across borders – boosted London’s role as a centre for communication and control, and as a meeting place within the world economy. Language, time zone and cultural assets all helped. English became the global business language. London’s working day helpfully overlaps with Asia in the morning and with North America in the afternoon. And the city’s liveability, cosmopolitanism and cultural offer all made it attractive as a location for decision-makers, skilled workers and students. Complementing this economic growth, by the turn of the 21st century <a href="https://web.archive.org/web/20140222053143/http://www.urbantaskforce.org/UTF_final_report.pdf">policy shifted to favour cities</a>. </p>
<p>Without the benefit of hindsight, it is much harder to decide if we are now approaching a move in the opposite direction. There is some evidence of this: in the year to mid-2017, London’s population experienced <a href="https://www.centreforlondon.org/reader/the-london-intelligence-issue-5/#population">the slowest rate of growth in over a decade, at only 0.6%</a>. International migration to London has declined to a net gain of only 83,000 individuals in 2016-17, though it remains the largest contributor to growth in the capital. </p>
<p>National Insurance Number registrations by people coming from overseas to work are dropping, with EU registrations <a href="https://www.centreforlondon.org/reader/the-london-intelligence-issue-5/#population">falling 25% year-on-year</a> to the first quarter of 2018. Net internal migration saw a balance of 107,000 people leave London for the rest of the UK, more than 14% higher than the previous year. Over 4.7m international visitors came to the capital in the final three months of 2017 - <a href="https://www.centreforlondon.org/reader/the-london-intelligence-issue-5/economy/#unemployment">a noticeable 5.7% fall</a> compared with 2016.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/240592/original/file-20181015-165897-pbte71.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/240592/original/file-20181015-165897-pbte71.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/240592/original/file-20181015-165897-pbte71.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/240592/original/file-20181015-165897-pbte71.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/240592/original/file-20181015-165897-pbte71.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/240592/original/file-20181015-165897-pbte71.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/240592/original/file-20181015-165897-pbte71.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Slowing down?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/merlijnhoek/24244407959/sizes/l">Merlijn Hoek/Flickr.</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>Passenger journeys on public transport are also <a href="https://theconversation.com/why-fewer-londoners-are-taking-the-tube-a-transport-researcher-explains-94754">decreasing slightly</a>. Falls in ridership may be an early sign that London is at or close to reaching peak growth. Or they may be driven by other factors – for example by changing work or commuting patterns, generational differences in housing choice and lifestyle or the rapid rise of ride-hailing apps. </p>
<h2>Still the main attraction</h2>
<p>Yet despite concerns over the impacts of Brexit, London’s economy has proved resilient, with unemployment continuing to fall and job numbers increasing. The number of jobs <a href="https://www.london.gov.uk/sites/default/files/leo-spring-2018.pdf">increased to 5.863m</a> in the final quarter of 2017, a 98,000 (1.7%) increase from a year earlier and a new record-high. The employment rate in London stood at 75.2% in the three months to March 2018, also a record high. Job growth is predicted to continue, as job vacancies in the capital have reportedly <a href="https://www.relocatemagazine.com/news/brexit-uk-economy-booming-jobs-market-defying-brexit-fears-dsapsted">increased by over 14%</a> in the year to the second quarter of 2017. </p>
<p>London continues to be the most productive region in the UK, although <a href="https://www.resolutionfoundation.org/app/uploads/2018/06/London-Stalling.pdf">many new jobs</a> have been created in low-pay and low-productivity sectors. And it’s still a very competitive destination for investment. In the <a href="https://www.ey.com/Publication/vwLUAssets/ey-EY-s-2016-atttractiveness-survey-europe/$FILE/ey-EY-s-2016-atttractiveness-survey-europe.pdf">EY 2016 European Attractiveness Survey</a>, 57% of almost 1,500 business leaders sampled put London among the top three cities for foreign direct investment in Europe.</p>
<p>So is London’s long boom finally coming to an end? Like any demographic or economic turning point, this one will be easier to spot in hindsight. If current trends continue, then London’s growth may slow considerably – or even perhaps reverse – over the next 30 years. Brexit could affect this in unforeseen ways – although the economic impacts of Brexit are likely to be <a href="https://www.camecon.com/news/economic-impact-brexit-starkly-revealed-new-report/">worse outside London than within</a>. And for the time being, London is still growing in terms of people, jobs and economic activity.</p><img src="https://counter.theconversation.com/content/104959/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Kleinman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There are early indicators that London’s fortunes could be shifting.Mark Kleinman, Professor of Public Policy, King's College LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/930182018-03-07T15:19:25Z2018-03-07T15:19:25ZBrexit: why Britain’s hopes for a special financial services deal are set to be dashed<figure><img src="https://images.theconversation.com/files/209339/original/file-20180307-146694-ckce93.jpg?ixlib=rb-1.1.0&rect=0%2C40%2C5392%2C3428&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The spectre of Brexit hangs over the City of London.</span> <span class="attribution"><span class="source">shutterstock.com</span></span></figcaption></figure><p>Philip Hammond, the UK chancellor of the exchequer, has the challenging job of crafting the best possible deal for the City of London after Brexit. The City is the home of the financial services industry which makes up <a href="https://theconversation.com/how-brexit-would-affect-uk-financial-services-50426">10% of the UK economy</a> and is one of the few areas that the UK has a trade surplus with the EU. Hammond wants to ensure both the continuation of business with Europe and preserve those attributes that made the City a global centre for finance. </p>
<p>It is therefore surprising that in a <a href="http://www.bbc.co.uk/news/business-43300202">speech</a> outlining the UK’s position on financial services and Brexit, Hammond confirmed what the prime minister, Theresa May, has said <a href="http://www.bbc.co.uk/news/av/uk-politics-43261013/theresa-may-s-mansion-house-brexit-speech-in-full">repeatedly</a>: the UK will depart the EU single market. Instead, he wants to secure a special trade deal with the EU that includes financial services.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/209343/original/file-20180307-146645-1p7nnkt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/209343/original/file-20180307-146645-1p7nnkt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/209343/original/file-20180307-146645-1p7nnkt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/209343/original/file-20180307-146645-1p7nnkt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/209343/original/file-20180307-146645-1p7nnkt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/209343/original/file-20180307-146645-1p7nnkt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/209343/original/file-20180307-146645-1p7nnkt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Hammond wants a trade deal with the EU that includes financial services.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/chathamhouse/27675478446">Chatham House</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Meanwhile, the EU has made <a href="https://www.ft.com/content/4d43e628-21f5-11e8-9a70-08f715791301">its stance clear</a>: if the UK leaves the EU single market, it cannot “cherry pick” certain sectors of the single market for a deal. It will have to accept a more orthodox free-trade agreement, similar to a Canada-style trade pact. This means losing the passporting rights that allow firms to have branches across the EU from a UK base. And it is this unfettered access to the EU market that has drawn a number of financial firms to set up base in the UK.</p>
<h2>The gateway to Europe</h2>
<p>Let us consider the position of a non-EU bank that was attracted to London due to its much-advertised position as the gateway to European finance at the beginning of the 2010s (before the Conservative Party campaigned in the 2015 election on a <a href="http://www.bond.org.uk/data/files/Blog/ConservativeManifesto2015.pdf">manifesto</a> promising a referendum on EU exit). London was advertised as providing companies with easy access to the markets of the European Economic Area (EEA). </p>
<p>In a speech <a href="https://www.gov.uk/government/speeches/speech-to-lord-mayors-banquet">to financial bigwigs in 2010</a>, then prime minister, David Cameron, summed this up with the declaration: </p>
<blockquote>
<p>We sit at the heart of the world’s most powerful institutions … We are strong and active members of the European Union, the gateway to the world’s largest single market. </p>
</blockquote>
<p>Cameron was proud to show how Britain was an important European partner, using its membership of the EU to defend and advance UK interests. To this end, he promised: “We will stand up, at each and every turn, for our financial services industry and the City of London.”</p>
<p>London was the leading location for European headquarters. Its unrivalled access to markets, as well as talent and cultural diversity gave it an edge against competing cities. And it was a robust hub in the uncertain post-financial crisis landscape, <a href="https://www.telegraph.co.uk/finance/economics/10828882/The-state-of-the-UK-economy-2011-and-now.html">while the eurozone struggled in comparison</a>. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/209335/original/file-20180307-146697-1qolv4k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/209335/original/file-20180307-146697-1qolv4k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=321&fit=crop&dpr=1 600w, https://images.theconversation.com/files/209335/original/file-20180307-146697-1qolv4k.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=321&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/209335/original/file-20180307-146697-1qolv4k.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=321&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/209335/original/file-20180307-146697-1qolv4k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=403&fit=crop&dpr=1 754w, https://images.theconversation.com/files/209335/original/file-20180307-146697-1qolv4k.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=403&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/209335/original/file-20180307-146697-1qolv4k.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=403&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Back when the UK had a say in shaping EU policy.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/number10gov/16685723418">Number 10</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>The main mechanism through which financial firms benefited from being based in London was through the EU financial passport. This passport permits financial services companies based and regulated in one country of the EU (or the broader EEA), and authorised under one of the EU’s single market directives, to do business in other member states purely on the basis of their home state <a href="http://www.ft.com/content/61221dd4-d8c4-11e6-944b-e7eb37a6aa8e">authorisation</a>.</p>
<p>By losing its place in the single market, London can no longer guarantee access to the world’s biggest consumer market of nearly 500m people. </p>
<p>Brexit also threatens the City’s access to talent. London has offered companies a huge specialist financial workforce and this <a href="https://www.economist.com/node/8058157">has underpinned its success as a hub</a>. But surveys show that many non-British workers are considering leaving in the next five years and high-skilled EU workers are the most likely to leave (as many as 46%) – because the UK is <a href="http://www2.deloitte.com/uk/en/pages/international-markets/articles/power-up.html">now perceived as hostile</a> to foreigners. </p>
<p>The firms that crossed the Atlantic to set up shop in the City will not see this as a gain. Not only will they see it as a loss, they will ring their lawyers to ask for <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2993551">options regarding compensation</a> for the potential loss of earnings that they can blame on Brexit.</p>
<h2>Next steps</h2>
<p><a href="https://www.ft.com/content/265ab62e-4842-11e6-8d68-72e9211e86ab">Equivalence</a> might be the UK’s only hope. This is where the EU grants market access to countries that show their financial sector regulation to be as tough as that of Europe. It has not been ruled out as an option by either side. But the rights it would secure do not match that of the passport and it would depend on significant goodwill from the EU.</p>
<p>Even if equivalence were possible, it begs the question of whether this would be enough to placate frustrated bankers. This is, after all, how American and Japanese firms access the EU. </p>
<p>The obvious way to compensate firms for the upset would be through <a href="https://theconversation.com/how-the-city-of-london-is-preparing-for-a-hard-brexit-71419">Singapore-style</a> tax and regulation incentives to keep them. But Hammond has promised not to do this – and it is a minimum requirement of the EU’s <a href="https://g8fip1kplyr33r3krz5b97d1-wpengine.netdna-ssl.com/wp-content/uploads/2018/03/PARL-Draft_Resolution_4_0503-1930.pdf">new draft</a> of trade negotiation guidelines, which offers a limited trade deal on the condition that the UK will not undercut the EU’s economy in this way.</p>
<p>So the thing that Hammond needs to drop to secure a deal with Europe is precisely what the industry is hoping to get as compensation for losing the passport. The chancellor therefore faces an impossible conundrum. Choosing a non-single-market Brexit can only be sweetened by eyeing Singapore, yet Singapore risks the total severance of links with Europe. There are no good options here.</p><img src="https://counter.theconversation.com/content/93018/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ioannis Glinavos does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The EU has ruled out any cherry picking from the UK for things like single market access for financial services.Ioannis Glinavos, Senior Lecturer in Law, University of WestminsterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/709342017-01-25T15:37:10Z2017-01-25T15:37:10ZHow a ‘tax haven’ Brexit threatens the UK’s social model<figure><img src="https://images.theconversation.com/files/154255/original/image-20170125-23851-9kh7lk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">shutterstock.com</span></span></figcaption></figure><p>The threat that Britain might soon become a <a href="http://www.independent.co.uk/news/uk/politics/brexit-eu-chancellor-philip-hammond-welt-am-sonntag-uk-tax-haven-europe-a7527961.html">“corporate tax haven”</a> – issued by its chancellor, Philip Hammond – revealed a fundamental truth about Brexit. This is not just a decision about the UK’s relationship with the European Union; it is also about what kind of economic and social model the UK will have in the future.</p>
<p>As the UK disengages from Europe, politicians have to consider how its role within the global economy will be redefined. This inevitably raises questions about its domestic policies and institutions, and how these might need to adjust to a changed international context. </p>
<p>Hammond’s speech made clear that the UK government plans to use this uncertainty over the shape of its socio-economic model as leverage within the Brexit negotiations. The danger is that these negotiations open the door for a major transformation of the UK’s social model, one that is not necessarily endorsed by the electorate.</p>
<h2>Race to the bottom</h2>
<p>The threat of a tax haven model would be an adoption of the “race to the bottom” approach to globalisation. This strategy views cutting tax rates, regulation and often labour rights, as the surest means to attract internationally mobile capital. The idea behind the threat is that, despite the EU playing hardball over access to the single market, the UK could siphon off investment flows and business operations that might otherwise have located on the continent. </p>
<p>This would put pressure on EU members to similarly lower their tax rates or provide other business-friendly incentives in order to remain competitive. And this would jeopardise their commitment to the existing social model, which balances economic growth with high living standards and working conditions for all. </p>
<p>In taking this route, the UK would be endorsing a similar model to small European states such as Ireland and Luxembourg that have attracted foreign investment by lowering tax rates and regulatory obstacles. </p>
<p>Such an approach is not new to the UK. In fact, Hammond is really talking about accelerating and deepening its commitment to a process that is well underway. The UK social model has long been <a href="https://books.google.co.uk/books?hl=en&lr=&id=zVsTDAAAQBAJ&oi=fnd&pg=PA55&dq=+UK+market+liberal&ots=xGpK1jNBP6&sig=SrE4f7sdbGnen1L5UlF5SmEk0Gw">more market-liberal</a> than that commonly seen on the continent, with lower public spending (relative to GDP) and a less extensive welfare state. It is often viewed as closer to the American model than any comparable European state. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/154252/original/image-20170125-23867-853xvz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/154252/original/image-20170125-23867-853xvz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/154252/original/image-20170125-23867-853xvz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/154252/original/image-20170125-23867-853xvz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/154252/original/image-20170125-23867-853xvz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/154252/original/image-20170125-23867-853xvz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/154252/original/image-20170125-23867-853xvz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Already a haven.</span>
<span class="attribution"><span class="source">shutterstock.com</span></span>
</figcaption>
</figure>
<p>The UK already has some of the least accommodating trade union laws <a href="http://bit.ly/2j4PNEQ">in Western Europe</a> and a pro-business <a href="http://www.heritage.org/index/ranking">attitude towards regulation</a>. The corporate taxation rate was <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/183408/A_guide_to_UK_taxation.pdf">lowered</a> substantially under the Coalition government, falling from 28% in 2010 to just 20% by April 2015. Within the G20, the UK now has the joint lowest corporate tax rate. Plus, the UK (and the City of London in particular) lies at the heart of a wider network of Crown dependencies that offer low tax rates and conditions of secrecy <a href="http://www.newstatesman.com/economy/2011/02/london-corporation-city">that attract global financial assets</a>.</p>
<h2>A clever bargaining chip</h2>
<p>The tax haven idea is not, though, simply about redefining Britain’s position within the global economy. It is also part of a narrower set of interests within the UK economy. With the loss of EU passporting rights now looking much more likely in the wake of Theresa May’s Brexit speech, the tax haven idea can be interpreted as a message to the City. </p>
<p>The City’s status as an entry point to the wider European market was one of its major competitive advantages. With single market membership now in jeopardy, and major global banks reassessing their <a href="https://www.ft.com/content/0eba4f78-76b1-11e6-bf48-b372cdb1043a">commitment</a> to London, the incumbent Conservative Party will need to think about ways of compensating for the decreased attractiveness of the City as a base for European operations. Pushing further along the tax haven model may be one answer.</p>
<p>If the tax haven proposal is more than just a clever bargaining chip, then we should be worried. It is doubtful that inward investment, without progressive taxation, will lead to a social model that distributes wealth more evenly across society. In fact, it may well lead to a decline in overall government revenue, endangering the supply of government spending for important services such as the <a href="https://theconversation.com/is-the-crisis-in-the-nhs-as-bad-as-the-red-cross-says-it-is-70987">NHS</a>. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/154253/original/image-20170125-23867-15lct1p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/154253/original/image-20170125-23867-15lct1p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/154253/original/image-20170125-23867-15lct1p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/154253/original/image-20170125-23867-15lct1p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/154253/original/image-20170125-23867-15lct1p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/154253/original/image-20170125-23867-15lct1p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/154253/original/image-20170125-23867-15lct1p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Social fabric.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/rohinfrancis/22080289729">Robin Francis</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>There is also no guarantee that foreign investment would be distributed evenly across the geography of the UK. Much more likely is that investment would focus on the high productivity region of London and the South East, deepening the vast spatial inequalities <a href="https://www.equalitytrust.org.uk/sites/default/files/A%20Divided%20Britain.pdf">that define the UK economy</a>.</p>
<h2>A growing divide</h2>
<p>One of the major riddles of Brexit lies in the willingness of a Conservative government, traditionally supportive of the City, to act so clearly against the financial sector’s interests. Hammond’s comments hint towards a willingness to make other concessions to keep the City onside. </p>
<p>The tax haven model may well offer some comfort to the global financial services firms based in the City of London. It promises a framework that slashes the costs of doing business and keeps London internationally competitive. The danger is that in offering a panacea to the City to balance against the costs of Brexit, the UK government sacrifices what’s left of the UK social model.</p>
<p>Opting for this strategy would also signal the UK’s disregard for global inequality. It would be defining its position in the world as a home for the assets of wealthy corporations and individuals that seek to avoid taxation. </p>
<p>One of the big political battles ahead will be to push for a post-Brexit settlement that commits the UK to the politics of equality and opportunity throughout the country. Not one that sacrifices a social model to appease the City, exacerbating the very divisions that brought about Brexit in the first place.</p><img src="https://counter.theconversation.com/content/70934/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeremy Green is a member of the Labour Party.</span></em></p>The Conservatives may be willing to sacrifice what’s left of the UK’s beleaguered social model to maintain the City’s global status.Jeremy Green, Lecturer in Politics and International Studies, University of CambridgeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/714192017-01-18T11:48:27Z2017-01-18T11:48:27ZHow the City of London is preparing for a hard Brexit<figure><img src="https://images.theconversation.com/files/153215/original/image-20170118-3903-1ouqm1r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Standing tall.</span> <span class="attribution"><span class="source">shutterstock.com</span></span></figcaption></figure><p>Theresa May has made clear that the UK government’s Brexit strategy is <a href="https://theconversation.com/how-to-read-theresa-mays-brexit-speech-71359">to leave</a> the single market and customs union. It ends months of speculation over whether or not it will be a <a href="https://theconversation.com/explainer-whats-the-difference-between-hard-and-soft-brexit-66524">“hard” or “soft” Brexit</a>. </p>
<p>The one audience that was prepared for this, it seems, was the City of London. In fact, The CityUK, the finance industry’s main lobby group, recently <a href="https://www.thecityuk.com/assets/2017/Reports-PDF/Brexit-and-UK-based-financial-and-related-professional-services.pdf">published a list</a> of its key Brexit priorities for the UK’s financial services industry. It had one glaring omission: it did not ask the government to maintain its financial passporting rights. </p>
<p>These passporting rights are a key consequence of single market membership. They mean that authorisation granted to a banking business in one member state will suffice for operations across the EU. The City had <a href="https://www.ft.com/content/e8b14d60-3a36-11e6-9a05-82a9b15a8ee7">worried</a> for months that if the UK departs from the single market it would lose them.</p>
<p>But clearly it realised before the rest of us that the government could not be convinced to keep Britain in the single market. And this means that, instead of lobbying for a soft Brexit, financial services firms will start lobbying for other ways to recoup their losses. These will inevitably include perks and kickbacks, usually of the tax-cut variety, to stop companies jumping ship when the UK leaves the EU.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/153222/original/image-20170118-3882-vxc600.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/153222/original/image-20170118-3882-vxc600.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=1113&fit=crop&dpr=1 600w, https://images.theconversation.com/files/153222/original/image-20170118-3882-vxc600.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=1113&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/153222/original/image-20170118-3882-vxc600.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=1113&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/153222/original/image-20170118-3882-vxc600.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1398&fit=crop&dpr=1 754w, https://images.theconversation.com/files/153222/original/image-20170118-3882-vxc600.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1398&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/153222/original/image-20170118-3882-vxc600.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1398&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Philip Hammond.</span>
<span class="attribution"><span class="source">EPA/Facundo Arrizabalaga</span></span>
</figcaption>
</figure>
<p>The government will be more than happy to oblige. As the new chancellor of the exchequer, Philip Hammond, <a href="https://www.theguardian.com/politics/2017/jan/15/philip-hammond-suggests-uk-outside-single-market-could-become-tax-haven">recently indicated</a>, the UK could well take advantage of its anticipated “freedom from EU law” to become a tax haven by “changing its economic model to regain competitiveness” vis-a-vis Europe.</p>
<h2>Restoring balance</h2>
<p>Let’s take Theresa May at her word and assume the UK leaves the single market. The loss of passporting rights will not mean that the heady proportion of GDP contributed by financial services will disappear in its entirety. PwC <a href="https://www.pwc.co.uk/financial-services/assets/Leaving-the-EU-implications-for-the-UK-FS-sector.pdf">estimates</a> that the value of financial services to the economy will decline by roughly 6-10% by 2020, representing a reduction of around £7-12 billion, with some significant (but not overwhelming) corresponding loss of employment.</p>
<p>The reason that an exit from the single market is severe for financial services is rather mundane. It is a matter of increased costs and upset balance sheets. No one is suggesting that banks headquartered in Britain will no longer be able to do business in Europe. It will just cost them more: compliance and administrative <a href="http://www.investmenteurope.net/regions/brexit-loss-of-passporting-rights-could-halve-uk-exports/">costs</a> will increase markedly with the loss of passporting rights. </p>
<p>While this does not mean that banks will close (after all, major banks already have a presence on the continent), it does suggest banks will incur heavier costs. Some funds will need to move to the continent if accounts in euros can no longer clear from London. And, with this, some (but not all) jobs will go. </p>
<p>The cumulative impact of a hard Brexit is that Britain will present a very different proposition to businesses than it does now. This difference amounts to a few billion pounds wiped off the country’s GDP – not apocalyptic, but it is bad and unavoidable if access to the single market is lost. </p>
<p>Nonetheless, the banks now accept this and will work their damnedest to reduce the impact on their balance sheets. Remember, though, that the banks are not so concerned about the impact on the rest of us. While some may bid good riddance to the bankers, there is another knock-on effect of a reduced City: <a href="http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/12031950/City-of-Londons-tax-bill-hits-highest-since-financial-crisis.html">tax revenues</a>. </p>
<p>The British purse will face a sharp decline if significant amounts of economic activity migrate to the continent. This, on top of increased budgetary needs due to a deteriorating economy (especially since the UK runs a budget deficit at <a href="http://budgetresponsibility.org.uk/docs/dlm_uploads/BriefGuideAS16.pdf">around 4% at the moment</a>) will hard hit state finances.</p>
<p>Can other business, attracted from overseas, compensate? After all, one could point to banks operating successfully in <a href="http://openeurope.org.uk/today/blog/understanding-regulatory-equivalence-an-effective-fall-back-option-for-uk-financial-services-after-brexit/">countries outside</a> the EU. Before Britain’s referendum on EU membership, many <a href="http://brexitcentral.com/wp-content/uploads/2016/11/ChangeorGo.pdf">argued</a> that reduced connection with Europe frees up options for increased trade in services (including financial services) beyond Europe. </p>
<p>Some non-EU business is certain to come in, but this may not be the sort of business one wants. The UK cannot, and should not, seek to become a big-island tax haven. It cannot jump from being the centre of European finance to <a href="https://www.welt.de/english-news/article161182946/Philip-Hammond-issues-threat-to-EU-partners.html">Singapore-by-the-channel</a>. </p>
<p>The price to pay for attracting international funds would be more tax breaks and sharper tax cuts. This will not compensate for the loss of tax income caused by losing the passport, even if it helps firms retain a presence in London. It certainly won’t make paying for the NHS any easier for the Treasury.</p><img src="https://counter.theconversation.com/content/71419/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ioannis Glinavos does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The one audience that was prepared for a hard Brexit, it seems, was the City of London.Ioannis Glinavos, Senior Lecturer in Law, University of WestminsterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/673272016-10-20T12:15:37Z2016-10-20T12:15:37ZBritain’s great meritocracy gap – why businesses must widen their talent pool<figure><img src="https://images.theconversation.com/files/142496/original/image-20161020-8828-cjecc9.jpg?ixlib=rb-1.1.0&rect=0%2C635%2C4004%2C3212&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">shutterstock.com</span></span></figcaption></figure><p>Britain’s new prime minister has put meritocracy <a href="https://www.gov.uk/government/speeches/britain-the-great-meritocracy-prime-ministers-speech">at the heart of her government’s agenda</a>. It’s a noble goal. This idea of allowing those with the most talent to rise to the top of society and occupy the best jobs must surely be good for society. Similarly, attracting and promoting the best talent has to be good for business.</p>
<p>Rising <a href="https://www.equalitytrust.org.uk/wealth-tracker-2016">wealth inequality</a>, however, suggests that the UK has a long way to go to becoming a meritocratic society. If Theresa May wants to make Britain a place where people have “the chance to go as far as their talents will take them”, businesses need to look very carefully at how they recruit and select their future leaders. </p>
<p>Recent research we’ve worked on for the government’s Social Mobility Commission, into the workings of professions such as <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/434791/A_qualitative_evaluation_of_non-educational_barriers_to_the_elite_professions.pdf">law, accounting</a> and <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/549994/Socio-economic_diversity_in_life_sciences_and_investment_banking.pdf">investment banking</a> in the City of London suggests that the way meritocracy is discussed can actually curtail opportunities for social mobility. The findings show that new, more formal recruitment techniques offer the illusion that the City is “<a href="http://www.managementtoday.co.uk/forget-brown-shoes-investment-banks-fiercely-meritocratic/any-other-business/article/1407668#z87QqdbdxugUyAir.991">fiercely meritocratic</a>”. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/142490/original/image-20161020-8869-4w3piu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/142490/original/image-20161020-8869-4w3piu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/142490/original/image-20161020-8869-4w3piu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/142490/original/image-20161020-8869-4w3piu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/142490/original/image-20161020-8869-4w3piu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/142490/original/image-20161020-8869-4w3piu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/142490/original/image-20161020-8869-4w3piu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/142490/original/image-20161020-8869-4w3piu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Theresa May has made the case for meritocracy.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/number10gov/29457570052/in/dateposted/">Number 10</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>Yet it remains significantly more difficult for hard-working, talented people from lower socio-economic groups to gain access to these top jobs, compared to their more privileged peers. In particular, there is a disproportionate number of people working in the elite professions who have been privately educated. Research by social mobility charity <a href="http://www.suttontrust.com/researcharchive/pathways-banking/">the Sutton Trust</a>
recently found that while 7% of the general population attends a fee-paying school, 34% of new entrants to the banking sector were privately educated, rising to 69% of those working in private equity.</p>
<h2>Appearances can be deceptive</h2>
<p>Organisations certainly cannot be blamed for looking to recruit the most talented students to work for them and in many ways the recruitment and selection processes adopted by elite firms appear to be meritocratic and fair – everyone is judged by the same yardstick. The difficulty arises when trying to assess what is meant by talent. </p>
<p>Elite professions largely equate talent with good A-Level grades and a degree from a narrow range of the “top” universities. At first glance, pre-screening of applicants based on A-Level results may seem a fair way of dealing with large numbers of recruits. But A-Level performance is <a href="https://theconversation.com/social-mobility-why-does-private-school-give-you-such-a-leg-up-45739">strongly correlated with social background</a>, which serves to disadvantage certain groups. Similarly, focusing on students who have gained degrees at elite universities might appear sensible, but those universities are themselves more likely to recruit students <a href="http://www.bbc.co.uk/news/education-30939926">from privileged backgrounds</a>. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/142498/original/image-20161020-8852-1gnpqu3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/142498/original/image-20161020-8852-1gnpqu3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=345&fit=crop&dpr=1 600w, https://images.theconversation.com/files/142498/original/image-20161020-8852-1gnpqu3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=345&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/142498/original/image-20161020-8852-1gnpqu3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=345&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/142498/original/image-20161020-8852-1gnpqu3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=434&fit=crop&dpr=1 754w, https://images.theconversation.com/files/142498/original/image-20161020-8852-1gnpqu3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=434&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/142498/original/image-20161020-8852-1gnpqu3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=434&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Privilege persists throughout education.</span>
<span class="attribution"><span class="source">shutterstock.com</span></span>
</figcaption>
</figure>
<p>Less objective aspects of the recruitment process can further disadvantage those from lower socio-economic backgrounds. For example, final stage interviews with senior staff are often used to judge whether the applicant would fit into the firm. We were told repeatedly in interviews we conducted with staff across law, accounting and investment banking how important it is that candidates are “polished” and give off the “right” impression. </p>
<p>This may seem logical in a competitive, client-facing environment, but, as our interviewees explained, applicants who have the necessary intellect and aptitude can be rejected purely because they are wearing the “wrong” tie. Plus, an increasingly early start to the recruitment cycle involves applying for internships either before or in the first year of university study. This means that if applicants lack the social networks which provide knowledge about opportunities they are likely to miss out. Thus, the status quo is maintained and it is difficult for those from less privileged backgrounds to access elite professions.</p>
<h2>Redefining talent</h2>
<p>So what can these firms do? Some are clearly working on this and the increase in apprenticeships and post-18 entrance schemes in accounting has been one response. Other leading firms have introduced the use of <a href="http://www2.deloitte.com/uk/en/pages/press-releases/articles/largest-british-business-to-adopt-contextualised-recruitment.html">contextual data</a>, which allows them to see how applicants compare to peers at their school, to help them judge A-Level results. And many firms engage with third sector organisations such as the Sutton Trust and the Social Mobility Foundation to offer outreach programmes and work experience. These have been successful up to a point, yet change appears slow. </p>
<p>In order to facilitate further change it is important that firms measure and monitor the social background of both new recruits and current employees; examine all aspects of how they attract and select applicants and consider ring-fencing opportunities for internships from non-traditional candidates. </p>
<p>They should also think critically about how they define merit. Should a candidate’s background be taken into account when making judgements about how they present themselves? If Britain is to be the <a href="https://www.gov.uk/government/speeches/britain-the-great-meritocracy-prime-ministers-speech">“world’s great meritocracy”</a>, firms need to focus on selecting applicants on the basis of their potential to develop the attributes of a good professional, not the polish that comes with a more privileged background.</p><img src="https://counter.theconversation.com/content/67327/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joanne Duberley received funding from the Social Mobility and Child Poverty Commission to undertake the research upon which this article is based. </span></em></p><p class="fine-print"><em><span>Louise Ashley received funding from the Social Mobility and Child Poverty Commission to undertake the research upon which this article is based. </span></em></p>Research shows that the way meritocracy is discussed can actually curtail opportunities for social mobility.Joanne Duberley, Professor of Organisation Studies, University of BirminghamLouise Ashley, Lecturer in Organization Studies, Royal Holloway University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/611202016-06-19T14:54:27Z2016-06-19T14:54:27ZNigeria: a corrupt culture or the result of a particular history?<figure><img src="https://images.theconversation.com/files/126936/original/image-20160616-15113-qvxt5q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A boy holds a placard during a rally in support of President Muhammadu Buhari's anti-corruption campaign.
</span> <span class="attribution"><span class="source">Reuters/Afolabi Sotunde</span></span></figcaption></figure><p>Just before the <a href="https://www.gov.uk/government/topical-events/anti-corruption-summit-london-2016/about">anti-corruption summit in London</a>, British Prime Minister David Cameron made his now infamous public gaffe in a rather a silly, schoolboyish way. He boasted to the Queen:</p>
<blockquote>
<p>We’ve got some leaders of some fantastically corrupt countries coming to Britain. Nigeria and Afghanistan, <a href="http://www.telegraph.co.uk/news/2016/05/10/david-cameron-caught-on-camera-boasting-to-queen-about-fantastic/">possibly the two most corrupt countries in the world</a>. </p>
</blockquote>
<p>The rudeness and stupidity of the remark apart, it was also inaccurate. Nigeria justifiably has a reputation for corruption and criminal networks. But it is by no means one of the two most corrupt countries in the world. Somalia and North Korea hold that distinction,<a href="https://www.transparency.org/cpi2015/#results-table">according to Transparency International</a>. Nigeria also ranks as less corrupt than Kenya which is ranked 139 out of 167 countries. Nigeria is ranked 136.</p>
<p>Nigeria has long had a reputation for corruption in politics, business and its military establishment. It also has reputation for being heavily involved in the infamous international 419 financial scams, in drug and sex worker trafficking. </p>
<h2>Return assets stolen from Nigeria</h2>
<p>The reaction of President Muhammadu Buhari of Nigeria was one of <a href="http://www.africanews.com/2016/05/10/buhari-shocked-by-cameron-s-fantastically-corrupt-remark-about-nigeria/">shock</a> – rather a faux shock for the media. After all, Buhari is involved in cranking up an anti-corruption drive that has seen the arrest of major politicians and army officers. An investigation is ongoing into the <a href="http://www.vanguardngr.com/2015/12/alleged-2bn-arms-deal-fraud-efcc-uncovers-another-n600m-scam/">corrupt diversion of funds</a> that were to have purchased weapons to fight Boko Haram but ended up in the pockets of political, military and business insiders connected with the previous administration of Goodluck Jonathan. </p>
<p>Buhari said he didn’t want an apology from Cameron over the remarks but instead the return of assets stolen from Nigeria and banked in or via Britain. The latter is in reference to off-shore banks in British territories like Guernsey, Jersey and the Cayman Islands. These are the very offshore banking network revealed, to Cameron’s embarrassment, in the <a href="http://www.theguardian.com/news/2016/apr/03/what-you-need-to-know-about-the-panama-papers">Panama Papers</a>. The leaked papers detailed the vast international network of tax avoidance, money laundering and investment of stolen or criminally-obtained assets. </p>
<h2>London as a corrupt financial capital</h2>
<p>And Buhari has a point. The British are in no position to preach, according to the world famous expert on the mafia and other forms of organised crime, Roberto Saviano. The journalist and author told his audience at the Hay-on-Wye <a href="https://www.hayfestival.com/wales/index.aspx?skinid=2&currencysetting=GBP&localesetting=en-GB&resetfilters=true">literary festival</a> that British financial institutions enabled what he called “criminal capitalism” to operate through the network of offshore banks, investment funds and other holdings in British territories. </p>
<p>Saviano said his research showed that the City of London operated in a way that made possible the working of financial systems that eluded investigation, let alone taxation, and effectively made <a href="http://www.telegraph.co.uk/science/2016/05/29/britain-is-most-corrupt-country-on-earth-says-mafia-expert-rober/">Britain the most corrupt country</a>. He was quoted by the Guardian and Telegraph as saying:</p>
<blockquote>
<p>If I asked what the most corrupt place on Earth is, you might say it’s Afghanistan, maybe Greece, Nigeria, the south of Italy. I would say it is the UK. It’s not UK bureaucracy, police, or politics, but what is corrupt is the financial capital. Ninety per cent of the owners of capital in London have their headquarters offshore.</p>
</blockquote>
<h2>The gap between law and reality</h2>
<p>It is no coincidence that the late journalist, academic and expert on crime and corruption in West Africa, Professor Stephen Ellis, devoted an important part of his posthumously published book, <a href="http://www.hurstpublishers.com/book/this-present-darkness/">This Present Darkness</a>, to the role of British, American and Swedish companies among others in bribery, avoidance of the payment of royalties, false accounting and illegal capital flight in Nigeria and in aiding and abetting domestic corruption. </p>
<p>His superbly researched and incisive study details how British bankers saw the end of empire as both a threat and an opportunity and developed existing offshore banking networks. They used the “archaic jurisdictions” of British dependencies in the Channel Islands and the Caribbean to exploit “the disconnection between the physical location of a transaction and the legal space where it is recorded”. This enabled the cunning or corrupt to “exploit the gap between law and reality”. </p>
<p>British and other foreign companies took advantage of this in their looting of resources. They also used this in trading relationships with countries like Nigeria by concealing the real earnings from exports or inflating the costs of imports. So too did wealthy Nigerians, often through deals with foreign companies, who got their corruptly obtained riches out to offshore banks.</p>
<h2>A tradition of gift-giving</h2>
<p>But corruption in Nigeria is not something that can be blamed solely on multinationals. As Ellis painstakingly explains, it is much, much more complex. One major factor is the tradition of gift-giving to holders of public office. And then also the expectation that holders of office would use their position to distribute largesse to their followers. </p>
<p>These traditional systems of mutual benefit and patronage were not swept away by colonial rule but often distorted and developed by it. New classes of politicians, public servants and businessmen retained the exchange of gifts or distribution of wealth through social and political networks. These include the ubiquitous secret societies in some parts of Nigeria. </p>
<p>Old networks persisted in new contexts, creating informal or hidden patronage-client systems that were still important to the exercise of political power and formal state institutions. The weakness of Nigerian legal and formal political institutions – as evidenced by the repeated coups – meant that these informal networks became more rather than less powerful. This situation was reinforced by the very diverse and fragmented nature of Nigeria and the importance of local power bases for politicians.</p>
<p>The oil industry and sudden influx of substantial royalties also created opportunities for corruption, the expansion of networks of corruption and misuse of state funds or natural resources. Oil fuelled the rise of a new class of local middlemen, who acted as agents for the oil companies. Contracts for state-funded projects connected with the oil industry became a new form of patronage. At first this was through the military – whose officers benefited hugely from the political power that flowed from the barrel of a gun as well as from barrels of oil.</p>
<h2>Is Nigeria innately corrupt?</h2>
<p>What Ellis’s book amply demonstrates is the extent of corruption in Nigeria. It uncovers the networks of wealth accumulation and patronage that dominate politics, business and the oil industry. It traces the inextricable link with international financial networks used to launder or invest corrupt money. Finally, it exposes the plundering activities of multinational companies that avoid tax, under-report export volumes and inflate contracts. </p>
<p>Nigeria is part of a fantastically corrupt international network. But is Nigeria innately corrupt or has corruption developed and burgeoned there for specific reasons related to its complex past? I concur with Ellis when he concludes: “Nigerian organised crime is not created by culture, but it does arise from a particular history.”</p>
<p><em>* A longer version of this <a href="http://commonwealth-opinion.blogs.sas.ac.uk/2016/nigerian-corruption-and-crime-a-fantastically-corrupt-culture-or-the-result-of-a-particular-history/">article</a> was first published on the Commonwealth Opinion blog of the Institute of Commonwealth Studies.</em></p><img src="https://counter.theconversation.com/content/61120/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Keith Somerville does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Corruption in Nigeria is not something that can be blamed solely on multinationals. It is much, much more complex.Keith Somerville, Visiting professor, University of KentLicensed as Creative Commons – attribution, no derivatives.