The UK has never recovered from the devastation caused by the financial crisis, with the economy still more than 20% smaller than it would have been had it maintained its pre-crisis growth trajectory.
The difference from the United States, where the crisis began, could not be greater. The US quickly recouped all economic losses from the crisis and did the same again with the pandemic.
While Europe took steps to cap bankers’ bonuses and limit the participation of financiers, the United States rebooted its system and moved quickly.
Here in England we have gone even further than the Europeans. We imposed special levies on banks, overhauled their lending practices, and unnecessarily forced them to lock in retail operations at great expense.
Today they can hardly move on enforcement action, ‘know your customer’ box checks and ‘unexplained property orders’.
Citi’s real power has completely shifted from wealth creation to compliance.
Regulators fear accidents as much as they fear their own shadows. Their default position is to say no to almost everything. I’m exaggerating, of course, but only slightly.
One fund manager I spoke to has had enough and plans to soon move the bulk of his operations to the Gulf.
“The Financial Conduct Authority only wants big companies because it’s easier and cheaper to keep tabs on them,” he complains. “They would rather shut us out than allow us to compete.”
No fiscal carve-outs were called for in the Brexit trade negotiations. The attitude was that the city could take care of itself.
This may have been true. There is no reason why Citi cannot thrive outside the European Union. But if it is denied access to alternative international capital pools as compensation for the loss of the European market, it will wither away and disappear.
As it stands, they are heading to Dubai, Abu Dhabi, New York and the Far East rather than London.
Sameer Lilani, who closed three once-thriving fine jewelery and precious stone retail stores in Amrapali and moved with his family to Dubai.
The government’s decision to end VAT-free shopping for overseas customers has decimated the industry, with wholesale operations moving to the mainland and the Gulf.
“I’ve never seen so many empty boutiques on Bond Street. Now only the big luxury brands have a presence,” says Lilani.
London is rapidly becoming a place for temporary imports by viewing only bonds (TIBs), with transactions taking place overseas and therefore economic benefits.
These three examples of business flights are just the tip of the iceberg. The government has recently taken some small, tentative steps in the right direction, such as lifting bonus restrictions for bank employees.
But I’m afraid it’s already too late. Once the ball starts rolling, it’s hard to stop.
