Letters special: Strength of UK financial services mean the EU must come to us
IN 1979, in one of her first actions as Prime Minister, Mrs Thatcher abolished foreign exchange controls. As always, the Left, and particularly the SNP, condemned this as pandering to the interests of the City of London and, therefore, causing more inequality.
Thirty years ago this week, the bonfire of restrictive practices and policies known as the “Big Bang” was instituted in the City under Mrs Thatcher, and again the Nationalists and Labour lefties whinged.
And the results of these radical actions? According to Open Europe’s Report on October 17, “How the UK’s financial services sector can continue thriving after Brexit,” the financial services industry, based in the City (but extending to Edinburgh and Glasgow), expanded enormously to become the premier world hub that it is today.
It now contributes £180 billion, or nearly 12 per cent, of UK Gross Domestic Product (GDP), and 12 per cent of UK tax revenue from a mere seven per cent of total UK employment. Nearly 30 per cent of export earnings from the UK service sector in aggregate comes from the financial services industry, and the overall service sector is comfortably in surplus on foreign trade (£21bn), while the UK economy as a whole runs a trade deficit of nearly 6 per cent of GDP.
Needless to say, Nationalists and socialists always condemn bankers and fund managers as “greedy” exploiters. Yet, with breathtaking hypocrisy, they are more than happy to help them spend their earnings via the public purse.
This overwhelming success of the City’s financial services industry also extends to dominating the European Union in banking, asset management and insurance. According to the Open Europe report, the UK currently accounts for in excess of 70 per cent of the EU’s turnover in foreign exchange, in over-the-counter interest rate derivatives, in hedge fund assets, as well as 64 per cent of private equity assets and 59 per cent of international insurance premiums.
This superiority is explained to a limited extent by the passports that create a partial single market in financial services. Passports or equivalence regulations are far from universal. If, as a result of Brexit, there is EU intransigence on passporting and equivalence regulations, then there would ensue, to quote the report, “disruption of liquidity lines which (borrowing) EU Governments and businesses have to the huge pool of liquidity and capital markets in London”.
In short, the UK has the EU over a barrel on these matters. London is so dominant that no EU centre would be able to supplant it. Any losses forced on London by post-Brexit withdrawal of passporting and equivalence would go as gains not to Frankfurt, Munich or Paris, but rather to New York, Hong Kong, Singapore. And as the credit agency Moody’s has opined, difficulties for the UK would be “manageable and modest.”
The straightforward way for the UK to proceed over Brexit after the invoking of Article 50 is to offer to the EU free trade in all goods and services or – worst case – trade under World Trade Organisation rules (“Theresa May lacks coherent Brexit plan months after referendum, says Nicola Sturgeon,” HeraldScotland, October 25).
Which of the 27 member States would turn their noses up at that? Individually, they have too much to lose, particularly in financial services. And why would the First Minister and her Nationalists want to cut off their noses to spite their faces by staying in the EU, its Single Market and, ultimately, the euro? Even being stuck with the rest of the UK and the English is better than that. Thanks to Brexit, the SNP is becoming a busted flush.
Richard Mowbray, 14 Ancaster Drive, Glasgow.
MARK WARD (letters, October 25) ends his vitriolic attack on Alex Salmond MP by claiming he is an embarrassment to the SNP, which “quite plainly has not recovered from his own conclusive defeat”. It would appear to have escaped Mr Ward’s notice that only a few months ago the SNP won the Scottish Parliament elections for the third time in a row, and continue to ride high in the opinion polls (“SNP retains major lead in the polls,” The Herald, October 22).
Furthermore, the SNP, with a membership of more than 120,000, has just held its biggest ever conference, at which Mr Salmond received a rapturous welcome. I would remind Mr Ward that under Mr Salmond’s leadership as First Minister, council tax was frozen, prescription charges and university tuition fees were abolished.
If Mr Salmond did not lead us to independence, he came damn close, and left his country in a better and more confident place. Mr Salmond knew what he was aiming for, unlike David Cameron, who took us to a Brexit vote by mistake, while Theresa May’s Brexit aims seem wrapped in an impenetrable fog, apart from her stubborn insistence that one size must fit all, ignoring Scotland’s overwhelming vote to remain. The implications of that could well define Mrs May’s place in history.
Ruth Marr, 99 Grampian Road, Stirling.
SCOTTISH Labour deputy leader Alex Rowley’s call that Theresa May pursue a soft Brexit for Scotland has been widely reported (“Rowley backs Sturgeon’s bid for sweeping new powers to be handed to Holyrood,” The Herald, October 21). Given that Mrs May is unlikely to have heard of Mr Rowley, still less to have any reason to take her cue from a party that is in possibly terminal decline, one wonders what Mr Rowley is up to.
With his call for home rule for Scotland and tacit support for Indyref2, he is beginning to sound like an echo chamber for the SNP, presumably because he believes that is the way to stem the haemorrhaging Labour vote. The problem is that if Scottish Labour rebrands itself as Scottish National Lite (SNL), why wouldn’t Labour voters with nationalist inclinations prefer the real thing?
That is, of course, what distinguishes him from his leader, Kezia Dugdale, who has no truck with SNL, is implacably opposed to Indyref2 and has also backed Owen Smith against Jeremy Corbyn in the recent Labour leadership election.
Despite his current tack as a vociferous Corbynista, Mr Rowley has not always been so whole-hearted about the Labour leader, notoriously advising that Corbyn give Scotland a body-swerve in the run-up to the 2016 Holyrood election.
Despite his obligatory denials, Mr Rowley is conducting a high-profile campaign for Ms Dugdale’s job. Why else fly in the face of his leader and official Scottish Labour policy by declaring his views on Corbyn, a separate Scottish Brexit, Indyref2 and an independent Scottish Labour Party? Why the public meetings and extensive media coverage? All this might eventually secure Mr Rowley the top job in Scottish Labour, but it’s hard to see how a “Corbynised” SNL will save Scottish Labour.
Linda Holt, Dreel House, Pittenweem, Anstruther.
FIRST Minister Nicola Sturgeon referred to ‘”falling off a Brexit cliff” in relation to Scotland’s economy, with the implication that only independence can save us from this dire fate. Since Scotland’s trade with Europe is less than one quarter of our trade with the rest of the UK, leaving the UK would presumably cause us to fall off something much taller. Any advance on a cliff?
Carole Ford 132 Terregles Avenue Glasgow.
THERE has been much speculation concerning what should or should not appear in a revised version of the 2013 White Paper ‘Scotland’s Future’ , published in advance of the September 2014 referendum and since rendered out of date in so many significant areas (Herald letters, October 22.) It has been reported that in the last year the economy of the UK has grown by 2.2 per cent. That is a growth rate three times faster than that of Scotland, at 0.7 per cent. It is clear the 2014 referendum had a negative influence on the performance of the Scottish economy. With that background , it is obvious the prospect of another independence referendum will act as yet a further restraint on investment in Scotland.
Is it too much to hope the facts about the impact of all that uncertainty being generated with reference to Scotland’s future direction will be presented to the electorate to assist them in making an informed judgment ? I can remember when a generation was defined as the ordinary time interval between the births of successive generations, usually reckoned at 30 or 33 years. How times have changed!
Ian W Thomson, 38 Kirkintilloch Road, Lenzie.
I REFER to the letter from Nigel Smith (October 25) following through on his proposition that constitutional issues should require in a referendum a 55 per cent threshold to be valid.
The point I was making, and which he sidesteps, is that the European referendum vote was a simple majority. No threshold there. To wriggle out of this omission he concludes “if it was a constitutional issue, then yes”.
Now I, too, have been around a while and can recall only four UK referenda in my lifetime: two on European membership and two on Scotland, devolution and independence. It seems to me Nigel Smith is dancing on the head of a pin in suggesting this last referendum was not a constitutional matter. But there, I’m only a barrack-room lawyer. What do I know?
Christine Grahame, MA, LLB , Dip Ed, Dip LLP, SNP MSP for Midlothian South, Tweeddale and Lauderdale.