It seems like now is the right time to propose a new word – Brexitology. There is a growth industry of people applying the power of hindsight to the question of what Brexit means, and what happens next. How do we execute the clear democratic mandate for change without losing the internationally-focused businesses which provide so much employment across the country?
It is a particularly acute question for those of us in financial and related professional services. We rely on a specific blend of Anglo-Saxon law and culture, geographic and legal ties to Europe, and a uniquely global outlook. It is an alchemy which is hard to replicate, harder to invent, but easier to lose.
We have to start by recognising stagnancy was never an option. We cannot just rely on the advantages which made us the world’s number one financial centre after the Big Bang. The capabilities that will drive tomorrow’s growth and success will be very different from those of today.
If we want to remain at the top, staying the same would never have been enough. We must act now – using Brexit as a change agent to address the challenges of the next phase of the global economy, and its implications for nations and society.
What the referendum vote has done is magnify the impact and urgency of that change, and deliver new opportunities that will define our nation’s economic future.
It has also made clear that there needs to be a collaborative effort between the industry, policymakers and regulators to bring forward policies that support growth across the industry.
We cannot ignore the subtext to June’s vote – we have to be clear about how we help the UK, just as much as how the UK can help us.
Let’s not forget we are talking about a national strategic asset. Financial and related professional services employ over two million people right across the country, generated a £66bn tax contribution and a £72bn trade surplus in 2014 and attract more foreign direct investment into the UK than any other industry in the economy.
This is an industry which underpins communities and businesses across the UK. Maintaining this ecosystem is a complex task with many moving parts, but it is achievable.
TheCityUK’s latest report sets out in detail the way ahead for the industry to stay competitive.
As I see it, there are five broad priorities. First, global connectivity. The UK is a truly global financial centre and our international trade and investment partnerships are key. We must maintain an effective UK-EU relationship and sustain mutual market access, while also focusing on strengthening ties with developed economies such as the US and Japan, and enhancing links with key emerging markets such as China and India.
Second, drive national growth. The industry’s regional footprint is strong, but we need to build more connected regional centres, with specialist capabilities and expertise in priority areas such as emerging technology skills such as cyber and analytics, as well as more traditional areas like back and middle office.
We also need to have the right educational institutions and enterprise partnerships in place to ensure long- term success. And we must be clear about the impact of the supply chains we anchor. The number of jobs which ultimately rely on global finance should never be underestimated.
Third, expand our services. New sources of growth in the industry are fast emerging and, with clear partnership, we can ensure the UK retains and grows its position as the global leader in areas such as capital markets, insurance products innovation, investment management, legal services and infrastructure financing.
Fourth, embrace disruption. Technology is rapidly changing the industry, offering the opportunity to engage differently with our customers and employees.
The positive momentum we’ve already gained in FinTech needs to be harnessed to ensure that the UK becomes the place where the next generation of financial and related professional services is made a reality. Capabilities, networks and regulations need to be developed in areas that could redefine the industry, such as blockchain.
Fifth, build skills and attract talent. A changing industry means a shift in the skills and expertise needed to drive it. We need to develop and retain access to a diverse and global workforce that is skilled in areas such as data science, artificial intelligence and cybersecurity. This means effective partnerships with educators, and agreeing an approach to immigration to ensure we are able to attract and retain the brightest talent from across the world. It does also mean recognising that a skills-positive approach has to be reconciled with a broader constraint on migration.
We often say that we have strong foundations to our success, and that is true. If we build on those foundations, the wider economy will reap the benefits. Competition to host the highly-skilled and globally-mobile financial and related professional services industry is growing, and Brexit uncertainty could pose additional challenges. We must now push harder and faster to embrace the opportunities, specialist skills and technology to maintain the global strength of the industry and safeguard the UK’s continued attractiveness.
It will require real energy from industry, policymakers and regulators, but the prize, I believe, is worth fighting for.