Knocked back by two world wars, the City began to recover in the 1970s and 80s<\/a>, leading the way in Europe for mergers and acquisitions, privatisations, fast-growing investment institutions \u2013 especially pension funds \u2013 and foreign currency trading. The \u201clight touch\u201d approach to regulation<\/a> encouraged the growth of the lucrative eurobond market and the setting up of hundreds of overseas bank branches.<\/p>\n With the UK in the EU and a single EU market in financial services, London became the natural base for the EU operations of any financial institution worth its salt. The creation of the euro in 1999 only helped to consolidate London\u2019s number one status as Europe\u2019s financial centre. Even the buying up of London\u2019s banks by European banks \u2013 such as SG Warburg by Swiss Bank Corporation<\/a> in 1995 \u2013 did not dent London\u2019s success. The country\u2019s financial and insurance services now account for \u00a3124.2 billion, or over 7% of UK gross value added<\/a> to the UK economy. Financial services companies and their employees are major contributors to the UK Exchequer.<\/p>\n And now there is Brexit. There are two key problems<\/a> for the UK\u2019s financial sector. One is so-called financial passporting \u2013 the legal mechanism that allows financial services firms in one part of the EU\u2019s single market to operate across it. If leaving the EU means that UK banks or insurance companies can no longer sell financial products to customers within the EU, they will lose business. But, worse, US and non-EU banks based in the UK won\u2019t be able to, either. So, it\u2019s likely they\u2019ll move at least some of their operations elsewhere. Dublin, Frankfurt, Paris and Luxembourg are already pitching for this business.<\/p>\n The second key problem is euro clearing. London currently gets this lucrative business, despite the fact that the UK is not even in the eurozone<\/a>. EU leaders are already angling to repatriate euro clearing within the EU zone \u2013 but wrangling as to where.<\/p>\n Enter Macron. His views on Brexit are clear and concise: Brexit, for the British, is a grave mistake. Macron has called himself<\/a> a \u201chard Brexiter\u201d and has said that Britain cannot have its cake and eat it \u2013 that is, keep single market benefits while outside the EU. He asserted<\/a> that EU passporting rights for UK financial institutions should be banned and euro clearing should \u201cdefinitely not\u201d be allowed to stay in London after Brexit.<\/p>\n So, why is this worrying? After all, his predecessor Fran\u00e7ois Hollande talked in the same vein since last June\u2019s referendum, and before. Is it just bluster?<\/p>\n There are a number of reasons to take Macron seriously. He has been a banker, which Hollande never was. He is promising to cut tax rates for companies and individuals rather than raise them, as Hollande did<\/a>. He is also aware that there are many French bankers and fin tech experts<\/a> only too happy to come home, if offered the right incentives. Manuel Valls, Hollande\u2019s former prime minister, has already promised<\/a> to halve income tax and delay wealth tax for returnees. Macron is promising even more generous packages for researchers, academics, bankers, and those in fin tech and other creative industries.<\/p>\n The difference this time is that Macron is planning to deregulate the French economy, especially sclerotic French employment laws. He\u2019s also planning to deregulate French financial services. If he succeeds, Paris could be a real threat to London as a financial centre. But, to succeed, he must be the first French president for decades not to have been beaten by the country\u2019s trade unions<\/a> when trying to modernise the economy. Without a majority in parliament yet \u2013 the elections are in a month\u2019s time \u2013 he is planning to railroad the changes through.<\/p>\n It\u2019s not clear that Macron will achieve all his aims but one thing is sure, he\u2019ll fight tooth and nail to repatriate as much financial services business as he can from London to the EU \u2013 and preferably to Paris. Macron\u2019s election is bad news both for the City and the UK economy as a whole.<\/p>\n Janette Rutterford<\/a>, Professor of Financial Management, The Open University<\/a><\/em><\/p>\n This article was originally published on The Conversation<\/a>. Read the original article<\/a>.<\/p>\n The True Potential Centre for the Public Understanding of Finance<\/a><\/p>\n Study with The Open University<\/a><\/p>\n Free courses and resources<\/a> on Money and Business from OpenLearn<\/p>\n <\/p>\n Photo by LeWeb14<\/a> The election of the globalist and EU-champion, Emmanuel Macron, to the French presidency poses a threat to the UK\u2019s financial sector and its economy more broadly. A potted history of the sector shows how important its outward-looking nature has been to its success. This could just as easily be undone, if the British government embarks […]<\/p>\n","protected":false},"author":19,"featured_media":5515,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24],"tags":[217,305,790,891,919,1198,1340],"class_list":["post-5505","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-banking","tag-brexit","tag-emmanuel-macron","tag-finance","tag-france","tag-janette-rutterford","tag-london"],"_links":{"self":[{"href":"https:\/\/www.open.ac.uk\/blogs\/news\/wp-json\/wp\/v2\/posts\/5505","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.open.ac.uk\/blogs\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.open.ac.uk\/blogs\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.open.ac.uk\/blogs\/news\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/www.open.ac.uk\/blogs\/news\/wp-json\/wp\/v2\/comments?post=5505"}],"version-history":[{"count":0,"href":"https:\/\/www.open.ac.uk\/blogs\/news\/wp-json\/wp\/v2\/posts\/5505\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.open.ac.uk\/blogs\/news\/wp-json\/wp\/v2\/media\/5515"}],"wp:attachment":[{"href":"https:\/\/www.open.ac.uk\/blogs\/news\/wp-json\/wp\/v2\/media?parent=5505"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.open.ac.uk\/blogs\/news\/wp-json\/wp\/v2\/categories?post=5505"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.open.ac.uk\/blogs\/news\/wp-json\/wp\/v2\/tags?post=5505"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/cdn.theconversation.com\/files\/168751\/width754\/file-20170510-28071-bsii14.jpg\")
\noatsy40\/flickr<\/a>, CC BY<\/a><\/span><\/figcaption><\/figure>\nMacron\u2019s for the taking?<\/h2>\n
Learn more<\/h2>\n
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<\/a><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"