London's 'existential' crisis can't be fixed by boosterism

Jeremy Hunt did two things of note this week. One was to make the claim that Britain will create "a $1 trillion Microsoft"; the other was to call finance chiefs back to discuss what could be done to make the UK market more appealing to domestic and international investors.

- CHRIS BLACKHURST

The two are closely related. When, a decade or so ago, London was said to be neck and neck with New York in terms of world financial hegemony, it was always instructive to visit Manhattan and see those towers with the mighty US corporate names sitting on top.

They were head to head. Really? Well, yes, they were, because New York was the gateway to America, with a vast free market on its doorstep - witness those brands that started and grew there. London was also a springboard, an entry point to a giant bloc on its own doorstep, similar in size; one in which the traffic in goods and people was equally without constraint.

London was prospering because it was New York's equivalent. The latter had a continent to service, and so did London. Talk to any head of a US investment bank following the "Big Bang" in 1986 when the City of London opened up to foreign banks and ask them why they were here, and they will cite the proximity and accessibility of the EU.

Until the Big Bang, the City operated along tightly regulated, restrictive lines. Then, Margaret Thatcher deregulated, and a financial services industry that had been ticking along nicely for decades suddenly exploded in size. Foreign bankers, lawyers, investors, businesses - they all flocked to London. Just as NYC led the US, London led Europe. And not just Europe, but the Middle East and Africa. EMEA was ours.

Other EU financial centres could not compete. They did not have the language, infrastructure or attractions the UK capital offered. They had the EU, of course, but London had more. Not now. They're on the up, New York is on the up, and London is on the way down.