To think that we'd be mad to risk the UK's Financial Sector?

[Ailicece]

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.”

And
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.

And:
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.

If you think the UK is currently "alone in the desert" with only the financial services to save it from dying, it's hard to see how you can be against Brexit?

I mean, we're already teetering on the brink of extinction, and the horse is only carrying us further into the desert and away from water.

Why not shoot it and turn around and face all the other people with water right behind us?

I'm a confirmed Remain voter. But I still need metaphors that actually stand up. 😂

You are being misleading, OP. You are purposely conflating the Service sector (call centre staff, waiters, barmen etc) with the Financial Services sector. The latter contributes perhaps 10% GVA to the British economy.

www.parliament.uk/briefing-papers/sn06193.pdf

Doin, no, no sectoral interests here (see my post just above yours). DH is in manufacturing (one of a handful of small British companies that make and export high tech goods all over the world) and I'm in retail, although with a background in science. But you're right, Armageddon was a silly hyperbole to use. I was trying to illustrate that I think it would be very dangerous to risk destroying the UK's currently strongest sector. Much as I wish there was more manufacturing, the fact remains that it constitutes less than 15% of GDP today. And there isn't going to be more investment in manufacturing if the economy contracts, so that sector isn't going to magically grow to fill the gap left if the City collapses.

Auti did you read the article in my first post? Swiss banking is doing fine, partly because it has major operations in London that allow it access to the single market. This brings jobs, GDP and taxes to the UK. If Brexit happens, Europe's main financial centre will move elsewhere. And even so, Swiss banks have been trying for years to gain direct access to the single market and campaigning for entry to the EU, along with the Swiss government. Switzerland has a totally different economic and social history to the UK though so it isn't really comparable - much smaller, wealthier population, no NHS etc so they have very different needs from us. And most of all, they've never joined in the first place which is totally different from us trying to leave after 40+ years.

bacimamma I sure hope globalisation isn't going anywhere! But apart from being in a weaker position to trade with the EU, we'd also become less attractive to the rest of the world, including the Commonwealth (see the second half of my post at 15:19).

Radicalrooster I never claimed that the financial sector made up all or even most of the service sector. But call centre staff, waiters, barmen etc don't bring anywhere near as much money into the country as the City does. If there is less money overall, there will be fewer jobs for everyone further down the pay scale as well.

" foreign banks (Swiss, HK, Singapore etc etc) relocate elsewhere"

Great examples: Switzerland - non-EU member. Hong Kong - separate from China. Singapore - independent nation not part of any political union.

So the idea that not being in the EU would ruin the UK's financial sector is clearly ridiculous nonsense. Don't forget that we don't share a currency, and nor do any of those other nations, so any idea that we are somehow a bridge to the Eurozone is nonsensical in any case - we are at the moment ALREADY outside the eurozone, just as are the Swiss, and we will continue to be so.)

"Swiss banks have been trying for years to gain direct access to the single market and campaigning for entry to the EU, along with the Swiss government."

Uh, the Swiss government just this week announced that only a lunatic would join the EU now, and has officially dropped its dormant (1992) EU application.

"Uh, the Swiss government just this week announced that only a lunatic would join the EU now, and has officially dropped its dormant (1992) EU application."
could this have been a strategic, symbolic act? i don't know enough about the finance sector but could Switzerland gain in any way from brexit?

mamamea I'm referring to their operations in London, from whence they access the European single market. Of course they all have their headquarters in their respective home countries outside the EU - but (as explained in the article I posted in my OP) they are forced to conduct a lot of their business through significant subsidiaries in the EU as the EU will not otherwise let them do business in the single market. Luckily for the UK, so far, they've chosen London, which has brought huge investment to the City. Together with UK banks, all of these banks are what make up the City. All of these branches would move elsewhere following Brexit as London would no longer give them access to the single European market. UK banks would also move a significant portion of their operations elsewhere in the EU.

You're right about Switzerland dropping its dormant application. It's become clear that the "joiners" would never prevail, especially in today's climate. However the banks have fought tooth and nail for joining the EU for as long as I can remember (I used to live in Switzerland) and continue to do so. Switzerland has a lot of wealth per capita and has the luxury of being able to go it alone.

mamamea to make it clearer: London is attractive to banks from countries outside the EU precisely because it gives access to the single market. Hence the significance of Swiss, HK, Singaporean banks etc.

Following Brexit, not only would they choose a different base in the EU, but UK banks would find themselves in a similar position, having to move a significant part of their operations elsewhere.

my husband works for an investment bank in London and every one of his colleagues is voting brexit. And so are his friends at other investment banks. Mumsnet is weird sometimes.

I would imagine noone mentions the bankers/financial sector for the reason that most people still utterly despise them and 'a vote for brexit = a vote for their demise' might be seen as a pro-leave argument

Over reliance on service sector is nothing to be proud of either imo

Because I would trust the opinion of investment bankers

Over reliance on service sector is nothing to be proud of either imo - and noone has said it is! But destroying the one reasonably healthy economic sector we have without having any alternatives to fall back on seems daft, to say the least.

my husband works for an investment bank in London and every one of his colleagues is voting brexit. And so are his friends at other investment banks. Mumsnet is weird sometimes.

I agree, Mumsnet is weird sometimes, papayasareyum. Your DH and his friends are quite unusual in my experience as all the investment bankers that I know (not that I know a heap but a few) are firmly in the Remain camp. Mainly because they like their jobs and don't want to relocate, and because they believe Brexit would be bad for the economy as a whole.

I take it your DH or his friends don't work for JP Morgan, who have announced that they'll move 4,000 jobs from the UK if Brexit happens? Unless they like the idea of a relocation of course, but banks have also warned that wages will be lower if/when they relocate to Paris or Frankfurt...

Oooh nice to come back to see this thread is still going. Though it would be nicer still if people read the article in question before having an opinion on it

I know a load of people in the City (my late husband worked for a hedge fund) and they're not all just voting remain, they're bank rolling the remain campaign. Because they dearly want to stay based in London, but believe they have no choice but to leave to access the single market if we leave.

I have yet to speak to an investment banker who would vote leave. Just out of curiosity papaya which bank does your dh work for? I can't think of one investment bank that hasn't made it abundantly clear to its staff that a Leave vote won't lead to huge job losses (in London this is, not sure about elsewhere in UK).

My grandson is studying Economics, my family have friends in the Financial Sector, all agree we would be crazy to leave. I have read and listened extensively on the subject. We should definitely not leave.

As if people working in the financial sector were the voice of reason. I know plenty of rich French bankers who voted for Hollande in the last presidential election 😦