Stronger United-Stronger UK@United Europe: Remain & Transform!

The City of London: Towering over Europe

We have already mentioned that the City of London is Britain's most important eco-region and Europe's primary hub of financial and professional services. London's dynamism and high concentration of financial services institutions cannot be divorced from its extensive network of contacts with secondary hubs throughout the Old Continent. The centrality of London in the European financial services network has been confirmed by the recent vote of the City of London Corporation - the institution governing Golden Mile – whose task also is to “support and promote the ‘City’ as a world-leading financial and business hub, with outward and inward business delegations, high-profile civic events and research-driven policies all reflecting a long-term approach”, to resolutely endorse the ‘stay in’ option in the upcoming Brexit referendum. Its primary decision-making organ, the Court of Common Council, debated the motion on whether the City of London Corporation should remain neutral and decided by a vote of 58 in favor and 37 against that the Court of Common Council approve the City of London Corporation adopting a position on the UK's membership in the EU. It then voted to support the motion stating as follows:

Taking into account the views of City stakeholders and businesses, the City of London Corporation supports the United Kingdom remaining a member of the European Union.”

The decision to support this motion took into account the views of the City’s stakeholders and businesses with regard to three broad areas particularly important to the relationship between the City and the economies of the other EU member states: the City’s global markets and its competitiveness; City euro business and the influence of EU financial institutions in London; and the City’s contribution to both UK and EU economic prosperity.

Reports commissioned earlier by the City of London Corporation concluded that the City of London would be severely affected by Britain leaving the European Union but also that the prosperity of the EU as a whole would suffer without the muscle provided by London's financial cluster. Mark Boleat, chairman of the City of London Policy and Resources Committee commented on the position of key city stakeholders as follows:

"The representatives of major City institutions such as Lloyds of London, the London Stock Exchange, Aviva, Goldman Sachs, HSBC, Barclays, Prudential, RSA, Standard Life and Santander have given the views of their institution, not their personal views, that Britain should remain a member. The Lloyds Market is surely one of the great institutions of the City. The Chairman of Lloyds has written to the Lloyds market in the following terms: “The Council of Lloyds and the Franchise Board have carefully considered the question of EU membership in the context of the interests of the Lloyds market. We have unanimously concluded that the best outcome is for the UK to remain a member of the EU.” He pointed to the passporting trading rights with 27 member states of the EU and the benefits from the trade agreements that the EU has with many other countries. He concluded: “membership of the EU will be a crucial element in London being able to retain and reinforce its pre-eminent status as the global hub for insurance and re-insurance.” Surely we would want to support Lloyds in that. The views of our stakeholders are certainly not unanimous, but by a significant majority they favour the UK remaining a member of the EU. And they expect us to stand up for them, to represent their position as we have done on many other controversial issues…” 

This clear and unambiguous position taken by the City of London Corporation has been confirmed by major financial institutions such as Goldman Sachs and UBS. They both have warned against Britain leaving the EU and the severe consequences such a departure could have on Britain's financial stability and on the value of the British pound, which in the wake of such a shock would in their opinion experience a severe depreciation up to perhaps parity with the euro. Commenting on the current weakness of Sterling a UBS analyst stated:

"In our view, the largest part of the weakness in sterling since November can be attributed to increased concern over the possibility of exit from the EU…In the near-term, we forecast the euro to rise to 0.84 pence and sterling falling to $1.36, reflecting the weighted probability of Remain/Leave scenarios."