The City reboots itself

The threat from Brussels was as crude as one from any third-rate mafia hoodlum – ‘Give us all your fish or we’ll destroy the City’. The more old-maidish amongst the commercial gents, probably the sort who would have advocated giving Mr Hitler exactly what he wanted, were quick to point out that fishing was a tiny fraction of the UK’s GDP, a piddling insignificant part of the economy, and should certainly be surrendered to save the City. Indeed, if Catastrophe May had still been in power, she would have tried to do so. Fortunately for us this government is made of sterner stuff.

The City itself seems to have shrugged-off the threats, as Matthew Lynn wrote yesterday in the Telegraph. Indeed, his entire piece is so upbeat it’s hard to pick a single snippet to quote; we’re turning our backs on EU regulation and our faces out to the world, and the City is starting to feel the stirrings of that old buccaneering spirit again, after forty years under the sclerotic over-regulation of the unelected officials in Brussels. It’s not a puff-piece though – there’s a potential hard reality –

Step by step, the City, under the control of the Bank of England and the Treasury, is shaping its own regulatory system. True, there are risks in that. The City may lose access to European markets. That matters. British financial exports to the rest of Europe amount to £26.1bn, or 21pc of total UK services sold across the Continent, and that is far more than we import. And yet, despite that, it is still the right decision.

My own view is that right now, and for the immediate future, the EU simply won’t be able to deliver on its Covid rescue package without the City. They will make whatever post-transition adjustments they need to secure continued access to the bits of the UK financial services nexus they need. But their ambitions are still to displace London with a hub of their own – Frankfurt, Paris or Amsterdam.

Of the three, Amsterdam is the only serious contender and although, handicapped by the EU as it is, it will never overtake the City, it will provide healthy competition and stimulate continuous innovation and improvement in London. They’re like us; northern, with a liking for legal probity. Germany is too corrupt, the courts too partisan and biased, shareholder protection the worst in Europe, creditor safeguards too low and business is endemically bent. Frankfurt is a dreary little provincial town, Paris is too frivolous and France too bankrupt.

Standing up to bullies has more benefits than just exposing their weakness. It allows us to discover we still have a spine – and for the City, the scent of freedom is intoxicating.