There’s a report coming out later today that sets out the Corporation of London’s Brexit plans, and the deal the City wants with Europe. There is also something that occurs to me which might protect the City’s interests more than anyone expects. It is the oldest continuous democratic commune in the world, dating back over 2,000 years, and has its own laws to recognise its independence from the rest of the country.
Back in the days of drawing up the Magna Carta in 1215, these rights of independence were embodied in law, and still exist today. These rights include:
Taxes and Tolls. The City obtained exemption from various taxes and fines.
Judicial Rights. The City obtained the right to be tried by their own courts, that is, ‘within the walls’. Also, freedom from ‘wager by battle’ and certain legal rights distinct from the common law in respect of: lands, promises and debts. The mayor and aldermen obtained the right to be justices of the peace (JP’s).
War and Billeting. The City obtained exemption from being compelled to provide troops for war outside the City and to be free of billeting (providing soldier’s accommodation).
Officials. The City obtained the right to appoint a mayor, sheriffs, chamberlain, common clerk and common sergeant. Provision was also made for the annual election of aldermen.
Offices of the Mayor. The mayor (now Lord Mayor) of the City of London obtained various rights to oversee the activities of the City, that effectively made the mayor the head of government within the City’s walls.
Merchants and Markets. The City obtained the right to impose various restrictions on merchants as well as brokers. Also, the right to have: their own clerk of the market, courts, the ability to impose: charges on the weighing, carriage, survey (i.e. inspection) and the measurement of goods.
Miscellaneous. The City obtained the right to bear maces of gold and silver. Also, confirmation of their hunting rights.
Now, I’m not saying that the Corporation of London and the Lord Mayor could use these ancient rights to alter the course of Brexit … but it would make an interesting impasse if they did. Here’s what’s been happening so far, as reported by Patrick Jenkins in the Financial Times:
A City of London delegation head to Brussels with a secret blueprint for a post-Brexit free trade deal on financial services. The initiative led by Mark Hoban, the former City minister, is independent of government but has the unofficial support of senior figures in Whitehall.
The City delegation, which has already received cautious support from German officials during a recent trip to Berlin, will be hoping to convince countries such as Spain and France of the merits of their plan, which could influence the European Commission during talks with the UK government’s Brexit negotiators.
The plan is based on the principle of “mutual access” — allowing financial groups from the UK and the remaining 27 members of the EU to operate in each other’s markets without barriers if the UK leaves the single market. It would also involve shared regulatory supervision and joint dispute resolution.
Two people familiar with the plan said a “break clause” would allow either side to suspend the arrangement in certain extreme circumstances. Precise details of the plan are closely guarded, given the political sensitivity of government negotiations.
In one of the most detailed estimates of what it would cost banks if Britain crashed out of the EU with no mutual market access, research for the Association of Financial Markets in Europe found that UK-based lenders would face €15bn of restructuring expenses and up to €40bn of extra tier one capital requirements.
I’ll post details of the proposed plan on this blog later today but, meantime, there’s already been quite a lot of Brexit activity in the City taking place with moves to Dublin and Frankfurt being the main trend. Mind you, an even more noticeable trend is not the move of 1,000s front office key jobs to Europe in investment banking but the move of 1,000s of back office jobs from the suburbs and outlying cities and towns of Britain to countries like Poland.
JP Morgan announced the other day that they would be creating 2,500 jobs in Poland as have other banks, such as Credit Suisse, whilst simultaneously cutting staff in the UK. Similarly, Deutsche Bank, whose Chief Executive John Cryan recently likened some back-office staff to abacuses, has made little secret of plans to slash jobs and shift roles from the UK to Germany.
According to the Financial Times, such developments illustrate two key points. First, many of the jobs that could be at risk from Brexit may not be located in the City of London and, if regional roles are cut more readily than City jobs, it will only intensify British society’s resentment of high finance. The second is that while politicians make slow progress in Brexit talks, the companies affected are getting on with investment decisions that favour the EU27.
Meanwhile, who knows what the true number of jobs lost in banking and finance thanks to Brexit? Reuters came out with a survey the other day, saying that the number is 9,777. That seems like a very exact number, and differs from previous forecasts which range from about 30,000 jobs estimated by the Brussels-based Bruegel research group in February 2017 to up to 75,000 by Oliver Wyman in October 2016, and as many as 232,000 by London Stock Exchange chief executive Xavier Rolet in January 2017.
On that note, I now hand you back to the Brexit cheerleader extraordinaire, BoJo.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...