Chris Cummings, CEO, TheCityUK
Today marks the 40th anniversary of the introduction of decimalisation in the UK. We bade a fond farewell to pounds, shillings and pence and entered into a new world where, suddenly, there were 100 pennies in a new pound.
Our political leaders had decided that it was time to respond to change. If we were going to trade more easily with our European neighbours a more modern currency was necessary. We had already dropped the ‘10 Bob Note’, left the Guinea behind, and the notion that the meaning of "I promise to pay the bearer the sum of five pounds" actually was an amount in silver or gold was lost long ago. Recognising that the world was changing, it became necessary to change our currency.
Now, this is not an argument for or against joining the Euro – it is a reflection that when circumstances change so should our response. That when global shifts occur we can hang onto ideas, such as the Gold Standard, or we can move with the times and seek a new basis on which to be profitable.
We all know that the business world is changing. The rise of the Asian Markets becomes clearer everyday – it was only yesterday in fact when the Chinese economy was officially recognised as being the second biggest in the world (having surpassed the UK in 2005). The UK has traditionally enjoyed the prestige and profit of being a world leading financial capital. Indeed, we have been the place where ‘the world comes to do business with the world’. In part because of our imperial heritage and, then, because we were the home of the capital markets.
We developed a range of expertise that saw the growth of ‘the cluster’: the business phenomenon that brought together world class investment bankers, underwriters, lawyers, accountants, actuaries, dealers, indeed every type of financial and professional advisory business needed to launch, grow, buy and sell a business of whatever type. A unique ability clustered within a ‘square mile’ and with a talent pool that was so deep it could be drawn from across the nation. London's success has bred a national asset of a sector – employing over 1m people most of whom are outside the M25.
So it is useful on the day we changed our currency to realise that for future success we may need to modernise other parts of our business and policy thinking too. We live in an increasingly competitive and global world where we cannot rely on past glories. Other nations are building their financial services industries and all are targeting London's cluster to ‘salami slice’ the most juicy parts away. In this global war of attraction the UK is slow to respond – and even slower to act. The game is ours to lose.
Due to the financial crisis we have seen taxes rise, the regulatory approach intensify, and a culture which has celebrated innovation and entrepreneurship weaken. While this is an understandable response, we must not let reaction become retribution. Financial services are a major employer, as is the professional services sector. In fact, between the two they employ almost 1 in 10 of the UK population. At a time of cut backs and savings it is necessary to save every job we can.
The industry has been much reformed since the crisis. The wave of UK, European and global regulation enacted since 2008 must now be implemented and its effects measured before we go further. The UK has led the way in tightening regulatory sanctions against firms and while this has been an understandable response, we cannot continue to act in isolation. These are global issues that must be approached in a coordinated international manner. Not to do so will weaken our ability to compete, endanger jobs, and reduce our nation’s growth prospects.
www.thecityuk.com
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