Cities don’t stay on top forever. Just look at Venice in the 15th century, Philadelphia in the 18th or even Vienna in the 19th.
It’s a lesson some Londoners worry is being forgotten when it comes to the U.K.’s membership of the European Union. As banks underpinning London’s wealth raise the alarm over leaving, the man who runs the city disagrees: Mayor Boris Johnson has declared support for the “out” campaign, as has his aspiring replacement, Zac Goldsmith.
There’s no doubting London’s standing. Its $650 billion economy accounts for almost a quarter of Britain’s output and rivals that of Argentina or Poland. The crux of the anti-EU argument is that its success as a center of business, finance and ideas is global and enduring, regardless of changing circumstances.
“I’m sure the Venetian bankers were saying the same,” said Christopher Cummings, chief executive officer of TheCityUK, which lobbies on behalf of the financial industry. “Icebergs melt from the bottom, and these things can slowly get away from us.”
Advocates for staying in the EU warn of a long list of risks to London’s business model from a “Brexit.”
For starters, it’s unclear if the current regime that allows banks to do business across the EU from a base in the U.K. could remain. Finance represents about 17 percent of London’s economy. HSBC Holdings Plc has warned it would move jobs across the English Channel if Britain abandoned the EU, and ING Groep NV Chief Executive Officer Ralph Hamers said on Friday his bank would probably follow suit.
For non-financial firms, Europhiles say, a London no longer part of the 500 million-person European single market would be a less desirable location. The U.K. would also have to renegotiate virtually all its trade deals and completely overhaul immigration policy.
Today, the British capital is more central to the European economy than New York is to North America’s, according to the consulting firm Deloitte. It has 40 percent of major corporate headquarters and over twice as many highly skilled workers as Paris, its closest competitor.
“At the moment it’s like watching an amazing athlete winning every race,” said Will Higham, campaigns director at business group London First. He grew up in the city and remembers the ailing times of the 1980s, when more people were leaving than arriving. “You’d want to think very carefully about changing the training regime,” he said.
The U.K. will vote on whether to remain in the EU on June 23. Opinion polls indicate the result is likely to be close, even with Prime Minister David Cameron and most of his cabinet urging the country to choose to stay, along with virtually all of Britain’s large business lobby groups.
A YouGov Plc survey published last month showed London split 55 percent to 45 percent in favor of remaining, making it more pro-EU than the nationwide average.
Johnson, 51, bookmakers’ favorite to succeed Cameron as Conservative Party leader, and Goldsmith, 41, say they think the disruption to London from a vote to leave could be managed.
Answering questions at City Hall on Monday, Johnson said he doesn’t believe London’s financial industry “would be jeopardized at all” by an exit, thanks to its “conglomeration of skills and a huge, huge range of talents.” Across town in Parliament, Cameron implied Johnson’s position was more about his own political ambitions. “I have no other agenda than what is best for our country,” Cameron said.
Goldsmith, also a Conservative, is bidding to win the mayoral vote on May 5, seven weeks before the EU plebiscite. He wrote in the newspaper City AM that it “makes no sense for us to bind ourselves to a political bloc that is in decline.”
His Labour Party opponent, Sadiq Khan, who is ahead in the polls, said Goldsmith had put “dogma ahead of Londoners’ interests” and “chosen to jeopardize our place as a global city.”
Indeed, London is arguably more influential and successful now than at any point since the Victorian era, when engineers in what was then the largest metropolis on Earth built the first-ever subway system and its East End docks were the global hub for trade in everything from tea to tobacco.
The square mile of the City, the traditional financial district, is being transformed by skyscrapers where French lawyers share elevators with Russian bankers or Australian software developers. In outlying neighborhoods, once derelict warehouses or decrepit housing have been re-purposed by restaurateurs and entrepreneurs.
Closing in on 9 million, London’s population last year surpassed its previous peak in 1939. Its inhabitants account for about one in eight people in the U.K., yet contribute more than one in five pounds in tax revenue.
Much of that isn’t dependent on EU membership, said Richard Florida, an urban theorist and director of cities at the Martin Prosperity Institute in Toronto.
Nowhere else can hope to compete with London’s status as “the talent magnet for Europe. No other place comes close,” Florida said in an e-mail. Along with New York, “it is one of two economic centers of the world,” a reality that wouldn’t be significantly altered outside the EU, he said.
In the grand sweep of London’s more than 2000-year history, the city has certainly seen greater challenges.
In the 14th century, it lost half its population to the Black Death, and a second bout of the plague was only finally eradicated by the Great Fire of 1666. Then there was the Blitz during World War II and a toxic smog in 1952 that killed at least 4,000 people.
Later, the music and fashion scene of the 1960s eventually made way for the doldrums of the 1980s, with the Irish Republican Army’s bombing of Harrods department store, a disastrous fire at King’s Cross station and crumbling public buildings.
But those troubles were accompanied by the deregulation of finance and a stock-market boom, and some of the latest challenges are essentially the result of too much prosperity.
There are soaring housing prices, public transport that’s overcrowded despite record investment and a main airport bursting at the seams with flights from every corner of the globe. An attack in 2005 by al-Qaeda jihadists did little to tarnish London’s allure.
Resilience, though, is no reason, to start rolling the dice with current success, said Ben Rogers, the director of the Centre for London, a think-tank that studies the city’s future.
“London has emerged absolutely, unequivocally, as the economic capital of Europe over the last 25 years,” Rogers said. “Doing anything to cut that off is puzzling.”
- RSA’s CEO Warns That UK Withdrawal from EU Could Have Negative Impact
- ‘Brexit’ Would Risk Economy & Jobs, Caution 200 Executives in Open Letter
- British Corporate Leaders Will Likely Vote to Remain in EU: UK Business Groups
- What Will ‘Brexit’ Mean for London’s Financial Center? Some Questions Answered
- FACTBOX: What Will ‘Brexit’, a British Exit from the EU Look Like?
- British Departure from EU Would Put at Risk $670 Billion of U.K. Trade: Study
- ‘Brexit’ Will Create Real ‘Risks & Uncertainties’ for Lloyd’s & London Market
- ‘Brexit’ Threatens Britain’s EU-Dependent SMEs: UK’s RSA
- Risk of ‘Brexit’ Pushes U.K. Services Firms’ Confidence to 3-Year Low
- Insurers & Banks Could Pull Jobs from U.K. in Event of ‘Brexit’: JPMorgan
- Number of UK Firms Backing EU Membership Drops Over Past 6 Months: Deloitte
- Xuber Survey Finds London Insurance Execs Fear ‘Brexit’