Ever since Prime Minister Theresa May made it clear that she was not looking to stay in the single market once we leave the EU, the City has been stepping up its rhetoric about the dangers of a "hard Brexit", which now looks to be the government's starting point for the negotiations with the EU. Jamie Dimon, the ubiquitous CEO of JP Morgan, was the first out of the blocks.
At Davos, probably the worst possible location to choose, he said the bank was likely to have to shift a lot more jobs out of the UK than previously estimated. At the moment, it employs 16,000 people in Britain, not just in the City, but in places such as Basingstoke, Swindon, and Glasgow, and he speculated that a lot more of those than expected might have to be switched to Dublin or Frankfurt or somewhere else inside the EU.
Next up, Goldman's Lloyd Blankfein warned that "Theresa May seems to treat finance like any other industry" hardly the best choice of words, since most people will think that is fair enough. In a private meeting with the PM, the bank let it be known that she had been warned that a hard Brexit would allow other European cities to build up their position in financial services. Citigroup has started planning for major operation in other cities. Bank of America, a lesser presence in the UK, will probably say something similar very soon, and so will Morgan Stanley. If Lehman Brothers was still around, no doubt it would be threatening a move to Frankfurt although that might not be much of a loss.
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Those warnings are of course a serious matter. The City won't be destroyed by Brexit, no matter how complete the break with the EU turns out to be.It was a major finance centre before we joined the EU, and there is no reason why it won't be after we leave. Its depth of expertise, and its favourable time zone between Asia and America, won't change. But there is no question that it will suffer a bit, and it is naive to pretend otherwise. Plenty of banks were in the UK to service European customers and if they can't do that, they will go elsewhere. It would be better if a deal could be struck for what remains one of our largest industries and our biggest employers.
The trouble is, the government is far more interested in shoring up its political base than it is to pandering to the demand of the City. If the City wants to win this argument, then it needs better people to make the case on its behalf. There is no point in sending out a Wall Street CEO, with a net worth of at least nine figures, and getting them to argue that they need special treatment. Most people will just roll their eyes.
So who should the City be getting? For starters, it should wheel out spokesmen from regional financial sectors such as Glasgow or Swindon, places where a lot of the back office work for the finance industry is done. That, rather than the traditional Square Mile, is where the jobs will actually be lost, and where very ordinary people will be made redundant. There will be a lot more sympathy for them.
Next, it should get the British fund managers and especially the pension fund managers to do the heavy lifting. Just about everyone has some form of pension fund, and if the people in charge of it say Brexit would hurt them, then it would have more impact. Finally, the City should get some entrepreneurs, especially from Aim, or the tech sector, to speak out.Leaving the EU won't make much difference to someone who wants to float their company on the junior market for £10m. But it may make a difference to firms raising venture capital money and they are more likely to be listened to.
Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.
He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.
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