Protecting the City

I love a bit of historical context in my news, something that doesn’t appear often. Here’s a bit from Larry Elliott in the Guardian from a couple of days ago:

The prime minister will go to Brussels determined that the City of London be safeguarded from any of the dangerous ideas circulating on the other side of the Channel, such as a financial transactions tax. If he is serious about rebalancing the UK economy, he might be better off agreeing to some of these “dangerous” proposals, letting the City fend for itself (something it is perfectly capable of doing) and devoting some tender loving care to Britain’s manufacturers.

This is something policymakers say they want to do but never actually get around to. Winston Churchill talked of his desire to see finance less proud and industry more content. Harold Wilson waxed lyrical about how the UK of the future would be forged in the “white heat” of technology. Only this year, George Osborne said in the budget that his plan for rebalanced growth involved “a Britain carried aloft by the march of the makers”. The song remains the same: rhetorical flourishes to disguise the fact that for the past century Britain has gone steadily backwards as an industrial power.

This is a country that has never had a problem manufacturing fine-sounding phrases; making things, on the other hand, has been a rather different matter. The reality is that for many years the only industry that has really mattered in Britain has been the financial services industry. Picking winners has been abolished for all but one special interest group in the economy: the City.

It’s only a snippet of history in that middle paragraph, but still. In this case, however interesting it is, historical context can also be depressing, and make you think nothing will ever change.

I don’t know nearly enough about Europe to have an authoritative position on what Cameron should be doing there right now. My anti-Tory instinct says he’s doing the wrong thing. In reality, I couldn’t convincingly argue the case.

But banging on about protecting the City of London — that barely democratic, tax-evading fiefdom which seems to manage quite well on its own, through thick and thin, while other regions and sectors of the country struggle — seems like a dumb continuation of the history mentioned in passing above.

London’s financial services as a whole — not even just the City’s — account for only 4.5% of UK GDP (2008 figures). Is it worth isolating the country from our neighbours simply to protect a small fraction of a tiny percentage of the UK’s economy? Is he only working for that one square mile of the country, and ignoring all the others?

9 Dec 2011 at Twitter

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