Why leaving the EU will undermine London’s global competitiveness
London is at the forefront of the huge changes buffeting our society and our economy, as we confront and cope with the realities of globalisation.
India and China, and the emerging economies of Indonesia, Singapore, Vietnam, Brazil and others, are overturning Europe’s traditional dominance. In Africa, Senegal, Uganda, Tanzania, Kenya and Ethiopia all had growth rates of over 5 per cent in the last year. China is investing more in African roads, airports, ports and cities than the World Bank.
The world of tomorrow will be shaped by these new economies, with their new manufacturing, new service sectors and new universities. London will have new “rival” cities – and by working with our allies in Europe we are better placed to compete in the industries of the future.
There is much to gain from expanding the Single Market further and developing the EU’s Digital Single Market – worth about €400bn per year and the best part of 4m jobs. The EU will increasingly be an area of huge opportunity for London’s tech industry, but a Brexit vote would jeopardise these visionary plans.
The EU is an engine for scientific development too. It accounts for more than a third of world scientific output – outstripping the mighty United States, and that gap is growing. It’s not surprising that Stephen Hawking and 150 other fellows of the Royal Society recently warned that quitting the European Union would be a “disaster for UK science”.
Read more: Now 90 top life science bosses have signed this Brexit open letter
According to the Russell Group, our top universities (five of which are based in London) receive £580m a year in EU research funding, more than the whole of Germany. And the current star of British science, Tim Peake, is also a symbol of European scientific collaboration. He is up in space because of a partnership between the European Space Agency and the EU, which provides 20 per cent of the former’s funds. Collaboration between scientists across the EU fosters advances that might not otherwise happen if these brilliant minds were separated by national boundaries. By bringing together a critical mass of intellectual talent, the EU creates the conditions for scientific discovery to flourish.
In infrastructure investment too, the EU is critical to Britain’s future prosperity and global competitiveness. From upgrading our roads, railways and bridges, to hospitals, schools and high speed broadband, the European Investment Bank (EIB) is a vital source of funds.
Read more: EU row sparked after EIB backs London's "super sewer" with £700m loan
The EIB is an EU institution in which Britain holds a sixth of the shares. It’s the world’s largest international public bank, owned directly by the member states. And it is a tremendous force for good. By walking away from the EU, we would lose access to the huge level of funds it provides – to businesses, universities, schools and local authorities in Britain – at preferential rates.
Last year alone the UK received £5.6bn from the EIB to help regenerate communities and modernise infrastructure up and down the country. In London, the powerhouse of the UK economy, the investment is crucially important. Over the past decade, the EIB has made available £7.3bn for transport, education, social housing, water, energy, healthcare and urban regeneration investment across the capital.
Among the recent loans are £280m for University College London to modernise its historic Bloomsbury campus and develop a new campus at the Queen Elizabeth Olympic Park, and £102m for Croydon Council to build new and expand existing schools.
Read more: Universities are at the heart of London’s success
Can London take the risk of seeing this vital source of investment dry up?
And can London afford the risk of being outside a Single Market of over half a billion people? That market is a key reason why US and Swiss banks trade here. It gives them easy access to EU markets and to a talent pool almost ten times the size of the UK’s alone. Businesses know how important EU membership is. A February CBI survey found that “uncertainty over the UK’s role in Europe” was the most commonly cited top concern for London’s businesses alongside “retaining our best talent”.
The same is true of the growing fintech sector. London is now the largest fintech hub in the world by revenue and the second largest by employment. But a recent KPMG report for London First found that Brexit would jeopardise the UK’s role as a global leader. Reduced access to skilled EU staff and increased regulation are worrying the industry. Leave campaigners seem oblivious to these fears.
Of course, London – and Britain – would still enjoy advantages if we vote to leave: our language, our inclusive culture, our incredible heritage and, despite all its problems, our world class education system. Companies tell me over and again these are reasons they choose to invest in Britain. But they are clear that, by leaving the EU, we would be throwing away another advantage – access to the European market, and through it access to the rest of the world.
This vital “pull factor” disappears overnight if we walk away from the EU. London is stronger with Europe and Europe is stronger with London.