Just before Christmas in 2020, my German uncle sent me the usual Christmas message. But he added something intriguing. He wrote in German that, “The English promised themselves too much and didn’t take into account a lot when it comes to Brexit.”
We hadn’t discussed Brexit before, at all. And I’m glad I didn’t reply, because those were his final words to me before he died of cancer…
As awkward as it may be, since then, the news for Brexit Britain has been looking rather good, especially in the City of London.
The Telegraph reports that “London has retained its crown as the world’s top destination for financial and professional services…” as “the Square Mile outperformed other major financial hubs, including New York, Singapore and Paris, as firms quickly adapted to Brexit…”
This is according to a new report by the – ahem – entirely impartial City of London Corporation…
Using 95 metrics, “[the report] found that the City had an “unmatched international financial reach”, while it also excelled as a hub for tech and innovation and its share of headquarters of Fortune Global 500 companies rose by a third over the past year. It also remained Europe’s leading destination for investment in financial services and was the world’s leading foreign exchange trading centre.”
Also reported on in the Telegraph was an updated EY report which covered the latest intentions of global financial firms to abandon the City post-Brexit:
EY report finds nine in ten major financial services firms plan to establish or boost operations in the Square Mile…
…The survey found that investor confidence in the UK financial services sector was at an all-time high, having risen significantly in recent months as pandemic restrictions recede and Brexit fears fail to materialise.
The Brexit fears failed to materialise and so the bankers stayed? Heck, the Brexit fears were that they would leave in the first place…
The Express pointed out how this optimism translates to boots on the ground:
Multinational investment banking giant Citi launched a £100million overhaul of its 42-floor Canary Wharf tower, despite foreign banks having been expected to leave London as a result of Brexit. James Bardrick, head of UK at Citi, said the investment showed the bank’s commitment to London for “25 years and beyond”.
Since Brexit, Citi has added more than 1,000 jobs in London, bringing it up to 9,000 staff. I wonder how many of them are EU citizens.
While talk of an exodus of 232,000 finance jobs was remarkable enough, this doom-mongering was my favourite in the Guardian:
“City firms plan to move 10,500 jobs out of the UK on “day one” of Brexit, with Dublin and Frankfurt the financial centres most likely to benefit from the UK’s departure from the EU.”
The job tracker compiled by the accountants EY, which counts job announcements to the end of November, found that the number of roles likely to be affected had fallen from estimates of 12,500 a year ago.
By the middle of 2021, the European Banking Authority had the number of bankers which left London for the rest of Europe at 95…
So, what happened here? How can the establishment have been so wrong? Why were we fed such awful predictions? How can people who try to predict financial markets fail to predict their own actions?
I mean, the EY polls are unlikely to be at fault. Surely it’s the bankers giving the responses who are to blame?
My suspicions are numerous.
Firstly, I believe the bankers just didn’t want the nuisance of travel and migration complications. And so, it became fashionable to be anti-Brexit. Especially in multinational office environments.
Secondly, when it comes to economic and financial research on political topics, the projections have an impact on the debate. And so you can adjust estimates and assumptions to get the result you want, and thereby influence the politics in the way you want.
It’s a bit embarrassing that we learned all this the hard way again in the pandemic so soon after Brexit. Fool me once…
Thirdly, it turns out that Europe needs access to the City to sort out its own finances, just as much as vice-versa. That’s why the EU has proposed prolonging a temporary waiver for European banks and fund managers to use UK clearing houses until June 2025, and the same for euro-derivative clearing rights.
In fact, as the Telegraph reported back in September, “Financial service exports to the European Union rose in the months after Britain left the EU despite warnings that the City would be hit by a collapse in trade, official figures show.” The comparison was of 2021 to 2019, so there are no pandemic distortions here.
So, not only was there no plunge in activity, there was an increase!
Yes, “the figures undermine claims by chief executives and politicians that Brexit would devastate the Square Mile’s ability to trade with the Continent,” but here’s the interesting bit: “European firms’ appear to have suffered most of the damage [from Brexit]. Financial services exports from the EU to the UK slumped by more than a third, predominantly hitting companies in Ireland, France and the Netherlands.”
No wonder the bankers didn’t move to Europe! Their business didn’t.
And all this is for the industry which was not included in the Brexit deal, which caused much wailing and gnashing of teeth at the time.
But it’s not just the City which is booming. Heck, these Brexit days, even the car industry in Britain is looking up. Bentley has just unveiled a £2.5 billion investment in Crewe to build its first fully electric car, securing 4,000 jobs.
Britain’s biotech sector may be in for a “golden age” according to corporate leaders in the sector. This was after research from the BioIndustry Association (BIA) showed that biotech and life sciences companies secured £4.5 billion in public and private fundraisings in 2021 – a 60% increase on 2020.
As we discussed during the vaccine furore, companies would be mad to base themselves in the EU after how vaccine producers were treated there…
All this adds up to a lot of economic growth too. The International Monetary Fund (IMF) predicted that the UK will outgrow the rest of the G7, and not by a small margin either.
Our stock market, too, should perform well, with oil and gas majors outperforming at last. Not that we need it. According to Schroders, the UK is home to a far higher percentage of ten-baggers than even the United States, meaning that the share price rose more than 1000%.
Of course, it’s not just inside the UK that people are noticing all this. Frexiteer Francois Asselineau really let ‘em have it in a video posted online:
Macron even said that he would have the red carpet ready for the hundreds of thousands of people working in the city of London who would cross the Channel to settle and take refuge here in France.
What has happened one year after Brexit?”
The UK has 4.5 percent unemployment, half the amount of France.
No, but wait. Did I dream it or not? We were told that Brexit would be the apocalypse, but it is not the apocalypse! The UK’s growth is higher than our growth…
…Google, Boeing and Shell have transferred their headquarters to London.
The City has regained its position as Europe’s leading financial centre and the French know very well that migrants want to enter the UK.
We were told that in international matters, the UK would isolate itself and not at all.
With the United States and Australia it made an alliance and this is the origin of us losing the contract for the submarines in Australia.
The response FROM Grégory Claeys, a researcher at European thinktank Bruegel, may sound familiar to you:
Frexit would lead to a freezing of financial flows and bring the global financial system to a cardiac arrest.
The failure of Lehman Brothers could look like a small shock in comparison, and even that had major real economic implication.
Yes, yes, I’m sure it would…
Actually, it could, depending on how you leave. The French probably would find a way to trigger true chaos…
Then there’s Brexit Britain’s emergence from Covid restrictions while Europe descends in riots and chaos over mandates, passports and isolation periods. According to a leading public health official, Professor David Heymann of the London School of Hygiene and Tropical Medicine, “the UK is the closest to any country in being out of the pandemic if it isn’t already out of the pandemic,” despite Brexit.
Ahh, the benefits of having such an unruly prime minister that nobody in government dares declare another lockdown…
But seriously, what if Brexit Britain booms? What if the EU’s nature is exposed? What if the fact that the EU holds back its owns prosperity becomes mainstream? And then what!?
Nick Hubble
Editor, Fortune & Freedom
