PLMR’s Dylan Underhill looks at the risks Brexit poses for one of the world’s great cities.
With the established order upturned by Brexit how does London’s global identity stand to be effected?
Britain’s exit from the EU is concerning for many of London’s liberal metropolitan citizens. They fear a decline in the diversity for which their city is known and loved and are worried by reports of rising levels of hate crime and lack of guarantees regarding the status of EU citizens already settled here. But London’s global pull reaches beyond the remaining 27 member states of the EU; there are some 900,000 non-EU nationals living in London. The question is, how robust are the features which make London so attractive across the globe and, crucially, will they survive intact as we extricate ourselves from Europe?
The magnetic pull of our capital is predicated on the jobs and cultural offering of the industries that thrive here. From city finance and tech start-ups to the West End and the many clubs and bars that make up London’s night life; European citizens flock here for work and play alike. As things stand many of them travel with ease, carrying an EU passport which allows them visa free entry, but Theresa May’s commitment to controlling immigration after Brexit throws that freedom into doubt.
Similarly the financial sector, so crucial to our economy, relies on its passporting rights. These make it easier for financial instruments and business to operate across the EU. Fearful of a rise in their own domestic Brexit “domino effect”, the remaining EU member states have threatened to withhold this vital concession.
When ARM was sold to the Japanese multinational SoftBank, it became the poster child for Brexit doom in the technology sector, an industry which has long been plagued by a skills shortage and which struggles to retain British ownership. That problem will only get worse in the event of restricted access to the foreign talent which currently makes up the domestic shortfall. A significant threat to these established and emerging industries is likely to have a negative effect London’s global attractiveness.
And yet, there are signs that forecasts of impending doom may be premature. For a start, the financial sector is so vital to the buoyancy of the UK economy that the government is likely to compromise over future payment to the EU in order to secure financial passporting rights and access to the single market. In positive news for the technology sector, Google recently made a commitment to investment totalling £1bn in a new Kings Cross Headquarters and Facebook shortly followed suit by announcing a 50% expansion of UK staff and a new headquarters in 2017. A stronger vote of confidence in the UK’s post Brexit future we are unlikely to see. What’s more, on the back of a weak pound, international tourists from as far afield as Japan, Indonesia and the US are flocking to the capital and spending big. Brexit Britain remains a significant global attraction.
London Mayor Sadiq khan insists London is ‘Open for Business’, and on the evidence he looks to be right. Caution, as ever, is advised. Tech giants like Google and Facebook can be confident of their ability to attract skilled workers, but smaller companies and other UK regions may struggle to compete in a shrinking labour market. Where the financial sector is concerned, any negotiations over payments for passporting rights will be controversial, so that process is unlikely to be a smooth one. As for tourism, prices may rise in the New Year as businesses seek to recover the cost of expensive imports, for this reason, the long term prospects for tourism may not be so rosy.
As with all things Brexit, uncertainty prevails, but on the evidence London’s brand is resilient and its global city status, for the time being, is secure.