November 17, 2014
You can feel the wealth everywhere in central London. The place has changed dramatically from the city I lived in during the 1990s. Back then it was almost sleepy: huge, yes; manageable, hardly; but excessively wealthy, no.
Fifteen years ago, rich and poor lived cheek by jowl. Most swanky streets were within spitting distance of inner-city council estates. Guttural geezers and shopaholic Sophies – both decked in Kate Moss Burberry – shared the same pavements. The Tube was the underground warren where all classes rubbed shoulders at rush hour, and London’s public parks were equal opportunity resources at weekends.
Today, it is different.
I am writing from a café in Marylebone High Street, just off Oxford Street. A few years ago, the streets around here were pretty much residential, mansion block affairs with a few upmarket shops side by side with down-at-heel London boozers. Today, this area is a consumer mecca: upscale, high-end and downright expensive.
What has happened?
London has become a home to the super-rich. As the global 1 per cent got wealthier, London morphed into their secure playpen where no one asks too many questions. Russians, Arabs, financiers and the like descended on the place, driving up house prices and squeezing out local punters, who have re-grouped in the suburbs, leaving the centre to the mega-rich.
But where the mega-rich go, so too do the dirt poor, commuting from the nether regions to service the social effluent of the super-affluent. So not only is London rich, but it is also deeply unequal.
As a result of these changes, London feels profoundly less British and certainly less English, and much more European and Asian.
Interestingly, in tandem with this change in ethnic complexion, or possibly because of it, there has been an upsurge in British/English patriotism.
When I lived here, a significant minority, but still a minority, wore the poppy in November. I thought they were just Tories. This, too, has changed – and in the past days, London has been a veritable poppy-fest. Everyone is festooned as if the garland distinguishes the real Brits from the shifty foreigners.
The link between the rise in al-fresco poppy patriotism and the rise in anti-European sentiment is unambiguous. When I lived here, anti-Europeanism was the preserve of the right of the Tory party; today, it is mainstream.
All countries have their national myths. We will have the 1916 stuff in a couple of years, and the Brits have the poppy, which seeks to romanticise that most unromantic of events: the almost casual slaughter of an entire generation of British and Irish men in Flanders – our relatives.
The British have made remembrance the national myth. They remember a glorious Britain before the EU. It was a standalone island, an uninvaded, unconquered, and never-defeated Britain. In the mythology, it stands in direct contrast to today’s European Britain, which is compromised, shackled, ceding sovereignty to a bunch of bureaucrats from nations that rolled over when they were asked to fight.
The image of a strong, unfettered and independent Britain is the promise of UKIP, large parts of the Tory Party, and significant chunks of today’s English electorate. And London’s very wealth and majesty feeds into this notion that an imperious Britain, driven by London’s riches and energy, can go it alone.
Significantly, the dynamo that drives both the poppy patriotism and the 21st century urban cleansing to make way for the mega-rich is the City of London.
The City and its riches offer some people a view of what the world could be like without Brussels. Whether it is true or not, the success of the City forges the image of a New Britain – a type of freewheeling, no-holds-barred Singapore or Hong Kong off the coast of Europe.
Just to give you a sense of how significant the City is and how persuasive the independence narrative is, consider that the square mile that is Canary Wharf, London’s financial sector, accounts for 10 per cent of the nation’s GDP. It is the largest exporter of financial services in the world.
The IMF says Britain is the largest net exporter of financial services, insurance and pensions in the world, with a trade surplus of $67 billion in those industries.
According to the UK Treasury, the industry provided 1.4 million jobs, with further employment in secondary industries. Fifty thousand alone were employed in the insurance sector. Financial services paid £27.5 billion in income tax and national insurance in 2011-12 – some 12 per cent of the total.
London handled 36.7 per cent of global currency transactions in 2009 – an average daily turnover of US$1.85 trillion and 17 per cent of all global trading in equities – a higher proportion than anywhere except New York.
British fund managers, predominately based in London, managed portfolios worth 11 per cent of all funds under management in the world. London hosts three major derivatives exchanges that account for around 15 per cent of global trade in commodities.
In 2005, Britain managed 22 per cent of the world’s private equity investments. The British Bankers’ Association estimates that at the end of 2006, London accounted for 40 per cent of the world credit derivatives market.
It’s easy to see why the City would embolden those, like the mayor of London, who are prominent in the ‘UK divorcing from Europe’ camp.
But if Britain did separate after a referendum, would the City remain unscathed?
The City is home to over 250 foreign banks, all of whom enjoy access to the single market via Britain’s EU membership. Might this change if Britain left the EU?
We saw in the Scottish referendum that big finance doesn’t like changes in the status quo. Finance likes the world just as it is. Why wouldn’t it? After all, the industry and its employees are doing very well, thank you very much.
However, if Britain were to leave, would the associated political instability and the increase in risk (concerning trading with the EU, where previously there had been no risk) prompt US banks in particular to hedge their bets and set up in Dublin, which would then be the only English-speaking capital city in the EU?
It is a prospect worth considering as the British political class gets set to convulse itself yet again over Europe and sovereignty, all orchestrated to the blindingly jingoistic background noise of The Dam Busters, War Horse and Downton Abbey.