As Theresa May unveils a near unrecognisable cabinet, is this new government good news for the City?
James Sproule, chief economist at the Institute of Directors, says Yes.
It is often said that what business wants is certainty. Well, that is going to be in short supply for a while, so the next best thing is going to be a team of negotiators that both understands what financiers need and what price to pay for those needs.
The EU miscalculated in the deal it offered David Cameron in February; it should beware making the same mistake again. The City has survived and thrived by being the world’s most flexible and innovative financial centre. The EU is fully aware that passporting of financial services into the Single Market is the ultimate prize, and it is going to ask a high price for it. But the EU also needs City financial expertise to flourish in future, and UK ministers are well aware of that.
The new chancellor is not flashy, but he is hard-nosed and pragmatic. The appointment of David Gauke as chief secretary to the Treasury, with his deep expertise in the minutiae of finance, is also welcome. Arguing the case as to why London’s success is vital for EU prosperity is a challenge, but one the next government understands and is willing to fight for.
Len Shackleton, professor of economics at the University of Buckingham, says No.
It’s very early days, and we must wish the new government well and all, but I see problems for the City – and business in general – in what we’ve learnt so far.
A too-eager push for the Single Market and financial sector passporting will surely end up with more restrictions on the City as a European quid pro quo. Abandoning fiscal retrenchment, dramatised by the unnecessary humiliation of George Osborne, promises further ballooning of the national debt. Sending Boris to Outer Mongolia and Sajid Javid to the provinces removes two persistent City defenders from the real action.
The Corbynista agenda for workers on boards and further controls on executive pay won’t encourage future FTSE listings. Clamping down on foreign takeovers of UK business is a retrograde step which may deter investment and could lose London important M&A business.
And if the promised new points-based immigration system is as cumbersome as the last one, businesses will find it difficult to recruit top talent. Worrying.