London to stay a financial hub after the pandemic and Brexit - interview with Andy Silvester

London is one of the largest international cities on the planet, with 37% of its over 8 million inhabitants who were born outside of the United kingdom, and 300 languages spoken beside English. As the first financial hub in Europe, it’s currently suffering the lockdown following the recent coronavirus pandemic.

I asked Andy Silvester, deputy editor of City Am to explain the present and future challenges for the capital of the United Kingdom.

How do you think London is doing in the present COVID-19 pandemic?

London as a city has always been quite resilient. I think this crisis has been unprecedented , and while we keep believing this slightly romantic notion that since we survived the blitz we will be able to handle anything, a virus isn’t really someone you can say we’ll beat, and all you can do is stay inside, and people have behaved slightly oddly.

I think, in terms of how London has reacted I suppose I have been pleasantly surprised by how relatively well things have worked despite having several million people in a small area, many without garden or outdoor space, many of whom are very fragile economic footprints particularly among the immigrant community, you know the first people to be laid off were employees in pubs and hospitality, but the sign of that having any real economic impact is not publicly visible. You know people are queueing at the shops properly, stay out of each other’s way, people are accepting the rules and whether that will last another week, or two weeks, we don’t know.

In terms of the businesses, I think the big question is a lot of the reasons to live in London have disappeared. I mean, to live in London you will accept house prices higher than elsewhere, accept that you might live in a smaller building that you might like, you probably commute for longer than you would like, you probably commute next to people you don’t particularly like, but the payoff is you will live in a city that is buzzing, and lively, and has everything you need on your doorstep whenever you want it, be that a gallery, or a pub, or a restaurant. When you take that away, people might start thinking why they live there when they’ve got friends who’ve moved out, have a bit more space and a garden and seem to be bit happier and healthier. This will take some of the vibrancy out of the capital. We’ve had a London renaissance of the past 10-15 years, because let’s not forget that London in the Seventies and Eighties was not a place that people wanted to come to, so we could slip back to that. Lots of the areas that were on the up, gentrified and becoming more economically viable, might not be able to keep up momentum, though it’s a very complicated question to answer.

Anything in particular about London as a financial hub?

There is a question about how COVID-19 affects how people are willing to be in a globalised economy anymore. There have been so many politicians who have risen to prominence over the past few years, all over the world, who have bemoaned globalism and globalisation but haven’t necessarily moved away from any of globalisation’s basic tenets in terms of how they actually operate. I mean, Trump’s “trade walls” are probably the only example I can think of on top of my head, whether it’s been an explicit move away from a  kind of international global order, for all the rhetoric, trade ties have only got stronger.

When you look at the way this crisis has reminded everybody of the nations’ state at its purest level, it orders and keeping you safe there’s a question about whether that flows over into the economy. It was interesting to hear Matt Hancock I think it was talking about how one of the reasons that Britain didn’t have ventilators right off the bat while Germany did, was that we didn’t have that kind of manufacturing sector, which even in a post-Brexit world was not a big deal, because we’d always be able to buy them from Germany.

Whether there’s a pressure across the world now that every country needs to stockpile a manufacturing industry or its own financial services, or its own support services industry just in case it happens again, I don’t know. There’s some kind of globalisation peeves, and it certainly seems it will take a while to dissuade people again that it’s fine for us to buy drugs from the pharmaceutical industry in America, and to buy our fruit and vegetables from Italy or Spain. As far as the financial services goes, London is obviously facing a double challenge of leaving the European Union as well as this global pandemic. I am optimistic about leaving the European Union, except that in financial services the level of interconnection between the European real economies and London financial hub is so high that there will have to be a process of either disentangling those over time (it won’t be immediate) or accepting that there will always be a role to play for both sides making sure that worked.

I think London will remain a global financial hub post-Brexit and post-COVID-19, but whether the financial services industry in the UK is slightly co-opted by government, I think it might be, to more aggressively serve the interests of the United Kingdom ahead of the global economy, that would obviously make London less competitive as a global hub, because London as a global hub needs to exist on a plane that it doesn’t matter whether an investment is in Middlesborough or Malaysia, it’s about the viability of the business, it’s about the money moving around. If that changes, the government starts seeing the financial services as part of the answer to solving the financial puzzle that they’ve got themselves into with these dramatic spending hikes, then that will obviously make London less competitive on a global level.

Any comment about the relationship between the government and Sadiq Kahn?

It’s quite clear that the trust between Downing Street and City Hall has almost totally broken down. Both the Mayor’s office and sources in No.10 have been at loggerheads about lockdown and construction sites.

There’s an element of politics on both sides, but, as a relationship, it can’t be good for the capital, and for the country, because London remains the economic engine of the United Kingdom. It can’t be good for that relationship to be where it is right now because of the global pandemic, and certainly it won’t be if it carries on afterwards. Just at a point when people are starting to talk about giving London more power to tax within its border and keep some more of that money and to allow London a bit more scope in devolution, the central government is not going to hand over that power to somebody they don’t trust or like, so there’s a question about how far devolution can go when these two deeply political operations are smashing into each other.

Perspectives for the future? Do you think London will cope with COVID-19?

There’s one statistic that really hasn’t made its way into the public eye yet, I don’t know if anybody has done the work, but it would be fascinating to know how many people left London in the six months before lockdown.

With the pandemic, if you are a bright Spanish student who was a at the London School of Economics and are supplementing their income by working at a pub, as it became apparent that Spain was going to be locked down did you fly home ( because it was clear that the jobs in London were going to disappear, and your university is probably shut down), do you stay there, or do you come back to London? I have a feeling we might have lost a significant number of very bright people who had moved to the UK and who were working here, and we’ll need to persuade them to come back, and to do that, London will need to be even more open and international than it has ever been.

There are people who look at our departure from the European Union and say what’s the point of London anymore, it’s closing in. Between central government and city hall there has to be a conscious effort to remind everybody that this is one of the three or four global cities that remains open for business, that remains open for people that are not just the best and brightest, but also people who just want to bloody work hard, and I hope that the last few weeks have shown people that any policy on who can come to the UK in the future is not just based on where you got your university degree from or a high salary, but whether you are willing to work hard, because the interconnection between NHS cleaners and coffee roasters, tube drivers and bankers has become blindingly apparent over the past few weeks. This is an interconnected, complete economy, if you start losing bits and losing the skills in certain areas it can have a significant impact on the wider economy.

Published in www.atlanticoquotidiano.it