When financial services leave, we all lose

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You may have seen the summary of the catastrophic impact of Brexit on the principal exports of foodstuffs to the EU. Not pretty at all and terrible news for our domestic producers. Good news for the EU’s growers, farmers and fishers, though. (Not the uniquely Scots’ whisky, of course, but maybe the cut in supply on the continent has prompted a switch to armagnac or schnapps.)

In short, taking the UK out of the single market and the customs union is proving to be as suicidal as any remainer knew and said it would be. Brexit has not delivered frictionless trade, but tradeless friction.

What you may not know is that there has been a massive transfer of financial services jobs and business to the EU. There may be no great affection for the sector as the painful legacy of the crash, the bailouts and austerity is still felt, but the fact is that the UK needed those businesses to stay and to pay their taxes here. We would need them in the best of times. We are in the worst of times – or will be once the post Brexit grace periods finally, finally come to an end. (The government has unilaterally extended these deadlines because of the political risk from empty shelves and ballooning business failures and unemployment)

Johnson’s ludicrously ill-conceived and scrawny deal made no provision for services at all, despite the fact that we are a service economy. Tories with a penchant for mental and cultural time travel back to a (perceived) golden age of manufacturing and agriculture may think it’s a good thing to wreck that dominance. But, as with most things Brexit, they have little grasp of the feasibility of replacing those drivers of the economy and even less understanding of the timescales and investment involved. John Redwood does not even understand that fish can swim from one part of the sea to another.

Trade has a fair bit in common with reputation: years to build up, seconds to destroy. Same thing works for customer relations…and for employees. London’s world-renowned financial centre was truly cosmopolitan, with many EU workers having made their homes here. Since they still have their freedom of movement, unlike their British co-workers, they were able to move back to Paris or Amsterdam or Frankfurt relatively easily. Brexit had, after all, spelled out that they were no longer welcome here and that the new mantra would be British jobs for British people. So even if the memorandum of understanding signed today opens up the prospect of staunching the outward flows, rebuilding them may never, ever happen.

And we must not fall into the trap of thinking that the jobs that have gone were of the proverbial Porsche-driving, jet-setting, champagne-swilling fatcat nature. City workers cover a very wide demographic and income profile. Think of the impact on those hitherto able to make a living from ancillary businesses: florists, restaurants and cafes, childcare, tailors, wine merchants, personal trainers and cleaners. These roles may exist because of the trappings of luxury for a few, yes, but they created jobs for many, nonethless.

And then there’s the hit to the Treasury from the loss in tax revenue, the consequences of which will be felt most, for sure, by those who can least withstand it. The lower tax take will be used to justify lower spending and investment, a return to austerity and the poor and vulnerable thrown to the wolves. We’ve already seen evidence of Sunak’s adherence to the damaging ‘household budget’ strategy.

The bottom line for all businesses and individuals whose success depends on ease of access to the EU is that the sooner this government reverses the huge damage inflicted out of sheer ignorance, greed and lust for power, the better. We need to be back in the single market and the customs union as soon as possible…if the EU will have us!