Lord Mayor on the Future Prospects of the City of London
July 22, 2016
On the morning of 14 July 2016, the Lord Mayor of the City of London, Alderman Jeffrey Mountevans, addressed BCCJ members and guests at a fully-booked breakfast session at the Shangri La Hotel. He spoke on the future of London as the financial centre of the world, and the continued importance of the British-Japanese business relationship.
As Leader of the Corporation of the City of London, the Lord Mayor serves as the key spokesman for the local authority, representing, supporting and promoting businesses and residents in the City. Today, these businesses are mostly in the financial sector, and the Lord Mayor is regarded as the champion of the entire UK-based financial sector, regardless of ownership or location, throughout the country.
The Square Mile
The speaker opened the session with some key statistics about the City. Some 392,400 people are employed within London's Square Mile and 20% of the world's foreign equity is listed there. There are 251 foreign banks and the City is the leading western centre for Islamic finance, with 22 banks supplying Islamic financial services. 18% of cross-border lending is arranged in the UK and there is $2.7trn of foreign exchange turnover each day - 41% of global foreign exchange.
Lord Mountevans emphasised that the recent decision by the UK public to leave the EU will not affect the unequalled business prowess of the City of London and that it will remain the world's leading international financial centre with a unique breadth and depth of expertise in all aspects of the financial sector.
Referring to the UK-Japan relationship, Lord Mountevans said he was visiting Japan to further develop the vital trade links between the two countries, and that he is confident the relationship will grow in future with more exciting opportunities on the horizon - especially in the fields of fintech, asset management and overseas infrastructure projects.
"In the City, we are in close touch with stakeholders and Japanese businesses to ensure we are in a position to brief the government on all your concerns. We encourage you to actively contact the British Embassy in Tokyo, UKTI and other organisations to express your needs and expectations. The collection and analysis of this information will take several months, but it is important to be calm and to keep your eyes open for new opportunities."
The UK after Brexit
Another question posed was what form a post-Brexit UK would take. What is the likelihood of a Scottish independence vote and what plans do Northern Ireland have?
The speaker said that there was indeed a history of the Scottish National Party wanting to opt out of the Union, but that the new Prime Minister, Theresa May, had been very clear in the messaging in her first speech regarding the strong bond between the countries of the United Kingdom; this view was wholeheartedly supported by the City. He also emphasised that the speedy appointment of a successor to Cameron was a reassuring step and an indication that the government is keen for Brexit negotiations to move forward quickly.
Continued UK-Japan collaboration and new business opportunities
In the Q&A session, both Japanese and British company representatives talked about their interpretation of Brexit and political repercussions. A Japanese representative aired his concerns regarding freedom of movement and how this might affect the company's non-UK staff currently working in Britain. "This is a matter that has been addressed many times by our employees who have felt worried since the referendum." Lord Mountevans assured the audience that the City had no intention of losing this talent and that such a brain drain would be prevented.
Responding to a question about what the City has undertaken to encourage overseas investment and collaboration, Lord Mountevans said that he visits thirty countries annually to share knowledge and encourage the growth of global expertise. There are a number of streams through which the City is promoting collaboration and best practice including UKTI work and the City's dedicated Economic Development Office. There is great exchange between various organisations and experts to set up infrastructure for compliance and governance in emerging markets.
Several people in the audience emphasised the strength of London as a business hub, and asked Japanese companies to reflect upon why they wanted to invest in the UK in the first place. Voted the world's most competitive city, London, it was said, "offers expanding international companies Europe's best talent, an excellent location and time zone, flexible employment law and low-cost legal structures, and capital gains tax relief. It will remain a gateway to Europe and to many other parts of the world, too."
A representative of a large Japanese multinational company said that after the uncertainty of Brexit, his firm made an effort to collect information from as many experts as possible, whether lawyers, geo-political scientists or economists. "We have come to the conclusion that it is better to wait a few months until the dust settles before making any decisions. We don't believe that the relationship between the UK and the EU will be negatively affected - the power balance will remain equal and the UK will get a 'status-quo position' in the negotiation process. We don't believe there will be any radical changes after Brexit."
Effects of Brexit on EU
A different perspective on the repercussions of Brexit was provided by several members. While a lot of attention has been given to effects of Brexit on Britain, there has been less consideration of the consequences for the EU such as: a referendum "contagion" among the weaker EU member states; increasing trends of nationalism and populism; speculation about the future of the Euro; or a "two-speed Europe" with stronger nations breaking away towards a more stable financial future leaving the weaker countries behind.
"The finger shouldn't just be pointing at the UK. Everyone in the EU is involved. We must all try to change the nature of the EU for the good of us all."
Britain and Japan moving forward
In conclusion, BCCJ president David Bickle encouraged the continued exchange of opinion between the UK and Japan, and urged Japanese companies to continue making their voices heard. The Lord Mayor reassured the Japanese attendees that the longstanding business relations and mutual respect between the two countries would remain as strong as ever. While the parameters may be different, he said, there is great ambition for Britain to move forward - and Japan will remain a priority relationship.
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