To think that we'd be mad to risk the UK's Financial Sector?(44 Posts)
I posted this link on another thread but thought it deserved its own topic as this is so important.
The Services Sector accounts for a staggering 78% of the UK's GDP. Since manufacturing has all but disappeared, this what the UK is best at offering the world and we really are rather good at it! At the core is the financial sector, which would be seriously under threat if Brexit happens.
Swiss banks have been trying, and failing, for years to get direct access to the single market. The EU have refused to include the entire Services Sector in its agreements with Switzerland and others. This has hugely benefited the UK, because it means that Swiss banks need major operations in the EU, and most have chosen London, bringing jobs and tax revenues.
If Brexit happens, then both foreign and UK banks would have to move large parts of their operations across the Channel, probably mainly to Paris but also to Frankfurt and Berlin. We'd be extremely naive to think that France and Germany would give the UK preferential treatment to protect the London financial centre! Brexit would be a disaster for the City and this would affect the entire UK economy, not just rich City types.
This article by Hugo Dixon (a Remainer, so not unbiased but very well informed) explains the Swiss situation really well: Swiss Option?
The Swiss government has itself acknowledged the drawback: “The existing barriers to market access place Switzerland at an economic disadvantage… Swiss financial intermediaries can only expand their EU business by way of subsidiaries in the EU, which means that Switzerland loses out in terms of jobs, value creation and tax receipts.”
The idea that Switzerland doesn’t have to follow EU rules is also misleading. It doesn’t have to adopt the social legislation. But in general it does have to adopt the same or equivalent product regulations – and it gets no vote on what those rules are. There is also no dispute mechanism so, if it gets into a fight with the EU over whether its companies have been fairly treated, there’s nothing it can do. The Swiss government has commented that it is “generally necessary to adopt developments of relevant EU law” to keep regulation equivalent.
Switzerland is also required to allow immigration from the EU. Economically, this benefits Switzerland just as it does Britain. But for those who want to stop EU immigration, the Swiss option isn’t a good one.
I strongly recommend everyone to read the entire article.
Surprised that nobody has an opinion on this... It only represents almost 80% of our GDP after all!?!
No replies mean you are clearly being entirely reasonable, Ailicece!
I agree with you. Not worth risking financial services. Or tech/pharma/publishing/creative industries, which will also lose out massively.
The Brexiters sometimes aren't keen on piling onto threads like these, IMO because there is so little defence of their position when the debate is purely economic/business like this.
That article is really good. I thought I knew quite a bit about this, but I just learned a lot more. Thanks.
Thanks Somerville! Phew, for a while there I wondered if I was invisible
Yes, I was very glad to find that article because my DH has been talking about how the financial sector would be screwed and how heavily we depend on it, but until he explained it I hadn't realised that the EU insists on specifically excluding the services sector from agreements with outside partners. We'd be very naive to believe that it would be any different for the UK.
And yes, yes, yes to what you say about tech/pharma/publishing/creative industries. My brother is a medical researcher and is terrified of Brexit as it would mean the end of EU funding and foreign investment, pretty much killing off research in the UK. He'd be able to find a job elsewhere (as would his OH who is a doctor in the NHS), but they really don't want to leave the UK!
No replies mean you are clearly being entirely reasonable, Ailicece! No argument here. Except that I wish we weren't so reliant on it. But I don't think that leaving the EU is going to magically make us Victorians again.
There have been similar threads actually with plenty of Brexiteers ? on
Eccomics favours freedom, many believe exit would lead to problems, many believe it would perform better in a smaller swifter model able to respond as we need it too.
We are the world’s 5th biggest economy, the 8th biggest manufacturer; we speak the world’s international business language; we have the best contract law and one of the most trusted judicial systems in the world. We have the most creative and innovative financial services sector anywhere; we have three of the top universities in the world and, according to the World Bank, the most powerful capital city on earth.
When we vote to leave on June 23, our economy, already doing better than any other in the developed world, will experience a boost from the newfound freedom to set up tariff free trade with the 80 per cent of the world that is not in the Single Market!
Our friends in the EU will need, for the sake of their own jobs and businesses, to continue to trade tariff free with us. And of course there will be the “Independence Dividend” of £10 billion each year
London is not only as world bank has said the most powerful capital city on earth but its also one of the most FUN, cultural, exciting and wonderful cities on earth. I really cant see Banks luring workers to Frankfurt, sorry.
I can't believe the remain campaign hasn't been capitalising on this more. It's such a simple and important statistic in an argument that is so complicated and confusing.
My dh works in finance. In the case of a leave vote we would have to immediately start looking at emigration options as he can't afford to retire yet and his workplace has made it very clear the UK won't be a viable location if we're out of EU.
Being in the EU has held back our trading prospects. In the last 53 years, medium-sized Switzerland and Singapore, a city-state, have struck trade deals worth five times as much as the agreements the EU has pitifully managed
The EU, with 28 member states, struggles to agree terms of trade, with so many varying interests, yet prevents us from striking our own way in the world.
If anyone has ever been out with a large group, you will know how hard it can be to get anything done, " lets go to Joes bar" "no!!" " I want to go to Cats bar, the man I like may be there" " but I hate that bar, lets go here" then you get somewhere and you cant get in, back to square one, Going out in a small group is far far easier.
Yes, I agree with your brother. I freelance in a field that straddles creative/tech and I've already had my workload drop a lot, as the companies who normally need me are eyeing up making the London offices smaller and expanding in mainland Europe if we leave.
My old job is academia and everyone in my old department is also stressed about brexit. So I don't think going back to that is an option either. And whilst I have a passport for another EU country as well as Britain, I can't move for family reasons.
But, returning to the whole country rather just my work woes , yes, financial services are where we'll most lose out if we leave and I don't think most people understand the difference between our current situation and the oft mis-quoted Swiss.
If its so clear cut Holes, why do you think they have not been using it?
I can take a wild guess...
This analysis presupposes that the only risks to the UKs financial industry is posed by Brexit. The EU has tried several times to interfere, and it will do so again. I'm not saying Brexit isn't a risk, but remaining isn't risk-free.
I think the fact that Brexit would reduce the importance of the London finance sector to the economy as a whole is one of the better argukents in favour of Brexit.
Obviously it is not the EU's fault that successive UK governments have governed in favour of the city at the expense of other sectors, but leaving will make London a far less attractive financial centre.
Iamslave yes, the UK is the world's 5th largest economy - and almost 80% of that comes from the services sector which would be in deep trouble following Brexit! Vote Leave and watch us fall way down the world rankings as not only foreign banks (Swiss, HK, Singapore etc etc) relocate elsewhere, but domestic UK banks move much of their operations elsewhere too, to be able to continue to access the single market. Bye-bye London as one of the most important financial centres of the world. I think you'll find that banks worry more about economic reality than about a fun place for their workers to live, sadly. And skilled workers will move where the jobs are make no mistake about that. See Holes' post (and countless others on the boards, from people who see this every day). Although I do agree with you that Paris is a more realistic alternative than Frankfurt, so I expect that's where Europe's new Financial Centre would be based. Plenty of culture there too! (Don't get me wrong, I LOVE London and would never want to live elsewhere if I have the choice).
And as for the 80% of the world that isn't the Single Market - sure. But make no mistake, we'll find ourselves in a much weaker position to deal with them than as part of the EU. We'd no longer be offering one of the biggest advantages that the UK currently has: it's an English-speaking world economic centre that offers full access to the European single market.
See this article from the independent for an analysis of why Brexit would make the UK much less attractive for investment from the rest of the Commonwealth for example. This may be why not one single Commonwealth country has declared that the UK would be better off leaving the EU, but most of them have strongly recommended that we Remain?
We are British.
We are internationally regarded as 'mad'.
I'm not sure that helps. Or answers your question.
Yes 80% of our industry is services but this includes butchers, bakers and candlestick makers! Not just big finance firms in London. If we brexit no one will go anyway until we negotiate with the eu and yhis will take years
Doinitfine that's one of the most absurd arguments that I've heard in this whole debate! Diminishing the UK's overall wealth would be good how exactly? Whilst it's highly regrettable that the primary and secondary sectors (mining, manufacture) have been decimated (thanks Mrs Thatcher!) how exactly would anything get better by destroying the tertiary sector (services) as well? You do understand that a country needs GDP to come from somewhere, right? What do you think pays for the NHS, schools, transport, public services in general, and benefits for those who depend on them?
The sad thing is that many of those of us who understand this have options (like Somerville I too have an academic background and another EU passport, as does DH), while many of the ones who are shouting the loudest about "taking our country back" don't. And neither do the three people that my little business employs. I'll be ok when it folds following Brexit as DH will still be fine (his sector won't be affected), but they don't have many options.
cricketnut I think you'll find that financial markets don't like uncertainty and instability. They won't wait for the outcome of exit negotiations. I give it a year until the great City of London is no more. Sadly, that will affect everyone - including butchers, bakers and candlestick makers. Our GDP will shrink considerably and pretty instantly too, if the reactions of the markets to various opinion polls is anything to go by. The pound has strengthened again recently, but only because expectations now are that Remain will prevail.
I'm not in the business of making pro-Brexit arguments.
I think support for Tory Brexit is silly for lots of reasons.
But I don't think the economy's long term interests are served by continuing slavish devotion to the interests of the city.
And I find your faith in a future as a "service economy" somewhere between amusing and desperate.
The pound will fall massively if we leave. That might be good for manufacters. The city won't like it, which is why no government will devalue.
Hmm, yes, maybe after Armageddon a new manufacturing industry may rise from the ashes. Personally I think that's one heck of a gamble to take though.
Neither I nor DH nor anyone close to us works in the financial sector BTW, I just think it's scary to risk something that our overall economy is so heavily dependent on. Whether we should be so reliant on it is another question.
I really wish Remain voters woukd avoid this kind of stupid hyperbole.
Words mean things.
There is already a manufacturing industry in the UK.
This is starting to seem more like you are pushing your own sectoral interests than making any kind of rational argument.
A reduced city of London and a weaker pound have been recommemded as ways out of our current weak ecomomy.
We should oursue those aims AND stay in the EU.
"Hmm, yes, maybe after Armageddon a new manufacturing industry may rise from the ashes."
Not likely is it? globalisation isn't gong way just because we have divorced from the EU. we will just be in a weaker negotiating position.
Switzerland's financial sector does pretty damn well outside of the EU.
The financial sector is not popular with the rest of society.
People say things like we would be better off without them.
And whilst I can see that our over reliance on that sector has allowed a toxic environment to grow, if you're alone in the desert, you don't shoot your horse, even if you ducking hate that horse!
Join the discussion
Registering is free, easy, and means you can join in the discussion, get discounts, win prizes and lots more.Register now
Already registered with Mumsnet? Log in to leave your comment or alternatively, sign in with Facebook or Google.
Please login first.