Wednesday, November 27, 2013

In Perth with the SNP

The clock at the Scottish National Party (SNP) conference in Perth is what made this event so different from previous political conferences this year.  Every speech by the party leadership and each resolution proposed by the membership was delivered in front of a countdown to the day, hour and second until the polls open for a referendum asking, “Should Scotland be an independent country?”

Every issue and sector was being assessed:  was it important enough, will it help the SNP win next year?

Stewart Hosie MP, SNP spokesman on the Treasury and Economic matters and a member of the Commons Treasury Select Committee, spoke on Scotland’s resilient economy and the role of the private sector in delivering economic growth.  The value of financial and related professional services to the Scottish economy was understood and appreciated, he told the businesses present.

John Swinney MSP, Cabinet Secretary for Finance & Sustainable Growth in the Scottish Government, used his meetings to emphasise how the SNP was ready to listen to business about the right framework for the future.  Fergus Ewing MSP, Minister for Energy Enterprise and Tourism, was keen to portray the SNP as the listening party, “Tell us and we will try to help”. 

The power of a bold infographic to illustrate the sector’s contribution to jobs and growth was also confirmed; with TheCityUK’s own artwork winning praise from Alec Salmond’s staff. 
So, “yes”, the sector is taken seriously.  It is one that can move the debate.

TheCityUK’s current role is to seek the answers to questions concerning our industry’s future in Scotland and the implications for the single market of the United Kingdom.  TheCityUK will provide facts for the debate, where we can, and use them to show the value of the financial and related professional services to the prosperity of Scotland.  With the clock ticking, business wanted answers to questions about what an SNP Scotland would look like.  The roll call of questions about the currency, EU membership, the lender of last resort, new regulations and regulators, a bank levy and the future of the UK’s Pension Protection Fund. 

There is hope that some issues will be clarified when the Scottish Government publishes its White Paper, a blueprint for independence, on Tuesday 26th November.  Others will have to be pursued into next year, maybe up to polling day itself on 18 September 2014.

The SNP activists did not have Perth to themselves.  Walking to the conference from the railway station a small shop caught the eye with a simple poster: “Say No to Separatism”.   Every step in this campaign will be contested.

Wednesday, October 30, 2013

The City Speaks - The views of financial and related professional services leaders on the EU

The views of the financial and related professional services industry on the EU is the latest milestone in TheCityUK's EU research initiative. The survey, which was undertaken by TheCityUK with Ipsos MORI, interviewed 101 British based CEOs, chairmen, CIOs, board members, directors and partners of firms from across the sector, including those from firms with headquarters in New York.  They spoke frankly about what the referendum debate means for the UK and their own businesses.   I know this is right because I was the one who ran the survey.

Follow this link to read the report in full.

Thursday, September 26, 2013

TheCityUK in the Big Apple

After visiting US regulators and legislators in Washington D.C. earlier in the summer, this month’s second leg of our US initiative focused on our own member businesses in New York, with some outreach to like-minded business bodies, the global media and Britain’s New York based diplomats.

The abiding impressions gained after three days of discussion across the city confirm the deep networks of interaction and interdependence between London and New York business, the need for both cities to demonstrate their value of the physical economy to the rest of their countries, the shared concerns about the future competitiveness of both places in the wake of the financial crisis, and the value placed on the UK by both its European and North American partners.  

Looking at the world from a New York skyscraper, the view of global trends was just as stark and concerning as the one seen from our more low-rise offices off Moorgate. Congress, the European Parliament or Westminster could be substituted for each other during some of the frank conversations about the degree of legislators’ awareness of the realities and economic contribution made by the financial and related professional services sector. As the United Nations prepared for its General Assembly to meet, many people raised the disunited nature of the global regulatory response to the crisis and the steps taken to fit businesses into self-contained economic blocs or states. The question on many lips was: will a global economy continue to be serviced by global firms, drawing on truly international resources?

The role of the UK in influencing events on both sides of the Atlantic was brought home by the number of speakers who looked for British input, often technical, always pragmatic, to deal with the commercial and regulatory challenges ahead. Our new relationship with the UK government through the Financial Services Trade and Investment Board (FSTIB) was welcomed as an example of how our sector can get a fair hearing from government and support from the top when the business case has to be made and jobs and growth are at stake.

Our relationship with EU regulators, officials and parliamentarians was appreciated and subject to both intensive questioning and helpful advice.  Our evidence-led approach to the EU referendum debate in the UK was welcomed, and our focus on the value of the Single Market (LINK) to the City’s success was fully endorsed.

Equally, the potential harm posed by pressure for stability for the European financial services sector - maybe at the expense of growth – drew comment when we discussed changes that could be brought about in Europe in the future. TheCityUK’s Financial Transaction Tax brief was cited as an example of an evidence-based campaign to reverse an unwelcome and ill-thought out financial initiative.

Our other publication that was much in demand was the Transatlantic Trade and Investment Partnership (TTIP) brief, explaining why financial and related professional services should be included in TTIP’s “regulatory coherence” provisions.  There is transatlantic business recognition that TTIP has the potential to build bridges between different regulatory approaches, both now and in the future. Both sides need to focus on solving the problem of regulatory divergence without undermining existing regulatory standards.

Finally, while the visit showed me that there are tremendous challenges ahead for our sector, there are also great opportunities to promote competitiveness in the interests of jobs and growth. To help achieve this, we will bring to bear its  unique network of influence and trust on both sides of the Atlantic.

Friday, July 5, 2013

Financial Services: A British, German and European Asset

Building alliances is a necessary part of economic diplomacy.  It is good to see it being done.

Gerry Grimstone, Chairman of TheCityUK, yesterday spoke at a gathering of key industry figures in Frankfurt, Germany last night. Below is his full speech. 

Framing Policy in Facts
In my experience, perceptions matter.  When they are powerful, they can be used to frame policies, even when facts say otherwise. Let’s start with motor manufacturing and my own area, financial and related professional services. Both industries are reliant on the other for their success. Manufactures require insurance, legal security, trade finance, price stability and investment to sell their products. My industry supplies those services and competes to do so in the most cost efficient, client-friendly way. We are interdependent parts of the supply chain.

However, ask the average European politician which country in the EU employs the most people in financial services and they would probably think of the City of London and then say, “Britain”. Ask them to name an EU country that exports more than 80% of the cars it manufactures. They would probably think of the great names in the industry and answer, “Germany”*.

However, the UK is also a major car exporter, exporting more as percentage of its industry than even Germany. Germany, as you will know already, is the leading EU financial services employer. Germany employs more than two million people in financial and related professional services. The vibrant German financial centres are led by Frankfurt with its 76,000 workers. The sector has generated for Germany the third largest national trade surplus in the EU, between €6 billion and €8 billion per year. This explains why TheCityUK, the British-based sector champion, sees Germany as an invaluable partner in promoting our sector as a European asset.

“The City” is a European Asset
TheCityUK is clear that “The City of London” is a European asset as well as the world’s leading financial centre. Both the UK and EU can benefit from the UK’s membership of the Single Market. It is a message for both policymakers in the UK and the EU. We are also clear that we have a role in our country’s referendum debate. The four themes we have are: 
  • The UK economy benefits from the country’s participation in the Single Market.
  • The UK should take a leading role working with EU partners to reform the European Union. 
  • We need financial regulation that serves the interests of the ‘real economy’.
  • We firmly believe in the UK’s future as a European financial centre, within the EU, open to the world.
We appreciate the UK’s role as a leading financial centre relies significantly on access to the Single Market. This gives British businesses, and international businesses that select London as their European headquarters, access to the world’s largest market with 500 million people. 

The UK in turn helps to create economic growth across the EU. Roughly half of all European headquarters of non-EU firms are based in Britain. The London Market is Europe’s, and the world’s, leading market for internationally traded insurance and reinsurance. The amount of lending outstanding from banks in the UK to recipients in other EU countries totalled over €2 trillion at the end of 2012; UK deposits sourced from EU countries totalled €1.8 trillion.

The UK is also well placed to revolutionise the diversity and resilience of Europe’s financial sector and the scope of its capital markets. As an important source of funding for corporates across the EU, “the City” is a European resource and not just a London location.

Partners for an Open, Reformed, Market-Friendly EU
Germany is already a key ally of the UK on a number of EU issues. They include the future of the EU Budget, where Germany and the UK called for a cut in February 2013, and the development of the Single Market. The German government shares the concern that there might be a fracture between the eurozone and the wider EU.

We emphasise the centrality of the Single Market to the thinking of UK-based businesses. But while wholesale financial markets in the EU are largely integrated, there are still significant barriers to the provision of financial and related professional services. One example is in the area of insurance, which remains highly fragmented across the EU; a house or car in the United Kingdom cannot be insured from France. Completing the Single Market in services is an economic priority. The elimination of all remaining barriers to trade inside the EU would increase GDP, largely based on growth in output of services. As part of this agenda, we also welcome the German call for greater co-ordination on the recognition of academic degrees and professional qualifications. This is a way of deepening the pool of talent available to European employers.

Crucially, we both look across the Atlantic to the largest national market in the world.  Germany supports the Transatlantic Trade & Investment Partnership, saying that it can underpin the long lasting strategic partnership between Europe and America. The Foreign Minister’s call for, “a speedy and transparent negotiating process,” is being put to the test right now.

Doing More, Doing it Better
Since our foundation three years ago, we have enjoyed many events and shared platforms with German policymakers, officials and regulators in London.  But that is not enough. Today we are in Frankfurt to enhance that dialogue and to identify potential areas of cooperation, especially where our common membership of the European Union provides a shared agenda.

Our visit comes as Germany prepares for federal elections in September. Key deliberations are also underway on the future structure of financial supervision in the EU. The final decisions on the supervisory and resolution phases of banking union will be influenced greatly by policymakers from Germany.

TheCityUK is here to offer our views without the use of a megaphone. We know that the UK and Germany have a joint interest in calibrating financial regulation and tax policy to support the European recovery. We know that the UK and Germany both understand the urgency of the competitiveness agenda, how financial regulation needs to enhance Europe’s international competitiveness and support growth in the European economy. We want to explain how the EU with its Single Market is a business necessity, not an optional extra. We also want to look ahead. To find ways of making the EU a better entity for business: reforms that enable markets to open and enterprises to prosper.

Across the EU, financial and related professional services firms employ 11 million people. The sector is an asset for the UK, for Germany, and for Europe. It is up to us to ensure that:
  • the value of the sector is understood;
  • the opportunities for its growth are gained; and
  • the services it offers reach more people and businesses than ever before.

*  German car exports 2012 -  76% total - UK car exports 2012 – 83% total