Farewell London, hello Edinburgh? Financial services will find a new home if we leave the Single Market
So we know London didn’t vote to leave the EU and nor did Scotland or Northern Ireland. But we know England did. For many Scots – like me – who have built global businesses out of London as Europe’s financial capital, there is a real sense that this vote and therefore Brexit is “not in my name”.
I, like the tens of thousands of other Scots working in the Square Mile, have built my life here. We love it. We love London’s multicultural identity and our businesses have flourished as a result of this. The talent pool here in the City of London is second to none right now, and I firmly hope this stays just the same. But the atmosphere has changed.
The nature of the national debate we have just had has not been good for “brand Britain”. Talking to international investors since the vote, they are concerned both about making investments into the UK while there is a political vacuum and they are concerned about the reaction to their staff here in London. It is vital that everyone works to ensure the welcoming environment which has been a core part of London’s success is not lost in all of this.
But the key business driver everyone wants to talk to me about is access to the Single Market. This is utterly mission critical for the future success of the UK financial services sector. How passporting rights are going to be available to businesses here in the City must be the first sentence of any conversation financial firms are having with policy-makers. We want to see the fact that this is a real problem now registering as the top priority in the mind of policy-makers. Nothing else is good enough.
Read more: The UK must remain in the Single Market to protect financial services
Of course there is a rather immediate problem – who to talk to about all this? There doesn’t seem to be anyone from the Vote Leave campaign answering the phone right now. And no detailed thinking was ready baked on what happens next. I wish I could say I was surprised. But we have to make the best of this situation. Business needs to ensure it has those passports.
Right now firms are looking at all their options to ensure they continue to keep Single Market rights. That includes a detailed assessment of domicile, the tax situation, the talent pool available, and the corporate “form” a firm wants to take. But there is also another factor at play here – where do you actually want to live?
As a Scot working with global policy-makers to get the best result for financial firms here in the City, I have been amazed by the number of major businesses who have reached out to me since the vote to ask detailed questions of the Scottish government. Since Nicola Sturgeon spoke in the immediate aftermath of the result, firms have been hanging on to her every word, particularly as she has focused on the opportunity for Scotland to want to remain part of the Single Market. While she says she is reflecting the democratic wishes of the Scottish people, firms want to know if Edinburgh can get those passporting rights.
Read more: We must fight to avoid permanent injury to Britain's vital finance industry
Other than London, the obvious ports of call inside the Single Market are Dublin and Luxembourg. Dublin in particular has a deep talent pool and a very attractive fiscal regime for the funds sector. In fact, there is no doubt that it’s the reason why many City firms have made Dublin the home for their fund ranges.
But just as the referendum decision was about economics, it was also about identity. For many of us, Sturgeon’s words will have resonated last week with both head and heart. And since the beginning of the week when I wrote in the Scottish press about similar issues, firms at the highest level want to start a fresh conversation with the Scottish government. They still have huge reservations about independence itself but they now want the SNP to do some harder work on their economic plans. They are wanting to hear more about how Single Market access from Scotland might be achievable.
So I am off to talk to the Scottish government about just that and how finance should go about the conversation with Brussels right now.
In the spring I had lunch with a great friend who has recently moved from London to Edinburgh. She is loving it. I am told Edinburgh estate agents also seem to be doing rather well this week.