Britain's PM and chancellor of the exchequer both took on the Brexit topic last week, but endorsed two rather different narratives. Whilst Theresa May announced that the international elite would be taken on and policies benefiting ordinary working class people would be preferred by her government, Philip Hammond paid a visit to Wall Street in a charm offensive aimed at selling his vision of the City of London’s continuing European dominance as a global financial centre.
Although it must be said that May also recently met with Wall Street, the comments that were put out following the Conservative party conference suggest it may now be her chancellor who will work the “hearts and minds”. Several prominent financial industry figures have long suggested that if bank passporting rights across the EU are lost, some of their operations will necessarily have to shift to an European Economic Area location instead.
Having met with senior executives from Citigroup, Goldman Sachs and Morgan Stanley, among others, Hammond sought to reassure the bankers. “We are listening and taking the time to understand the issues thoroughly,” he remarked.
Looking beyond the City of London, reports show new business in the UK services sector rose to a seven-month high in September 2016, confounding expectations of a post-referendum downturn. “The survey results suggest that the economy has regained modest growth momentum since the EU referendum, with especially strong growth appearing in manufacturing,” said Chris Williamson, chief business economist at information provider IHS Markit.
The truth is that nobody really knows what London's financial district, or the whole UK for that matter, will look like post-Brexit. The economic success or failure of Brexit will only become remotely clear once the process is over and trade relations with and outside of the EU are in place. What is certain is that Frankfurt, Paris, Amsterdam and Dublin, long envious of the City of London’s might, will be keeping a close eye on how well Hammond’s overtures are received – they would all love a bigger bite of the pie for themselves.