There are parallels between the Royal Navy and the City of London. Both have long and illustrious histories and have been part Britain’s power projection enabling the UK to punch above its weight in matters of politics, commerce and international trade. The make up of the Royal Navy was historically very diverse with sailors coming from many nations (some of whom no doubt were press ganged) and sharing in the bounties of successful campaigns and Britain’s expansionist colonial policy. The City of London is vibrant and remarkably diverse with some of the most talented and capable staff in the world of finance who are also attracted to London, it being a mostly agreeable place to live, as well as having a benign tax regime for expatriates.
Stretching the Navy analogy a little further, the British weather is notoriously unpredictable and it is almost impossible to predict the sea state with any confidence far into the future, but we can probably have more confidence in short term forecasts. The same is true about the predictions of the effect of Brexit on the City of London.
The prognosis of the impact of Brexit on the City range from an opportunity for global trade through to catastrophic, we can say with certainty that the whole process of Brexit, regardless of the end result will have had an impact on the City and its wider global relationships. The Brexit referendum and subsequent political shenanigans have unleashed views, opinions and forces that probably existed before, albeit in a latent state, leaving some to question why they should remain in the UK at all.
Brexit is already resulting in capital, institutions and individuals relocating abroad benefiting other cities and countries. How far this has to go is as yet unknown, but from a mercantile perspective opportunities will continue to exist and will be created. For lawyers this means that contracts will still need drafting and agreeing, disputes need resolving, and the basic commerce of buying and selling goods and services will continue. The UK legal system through its common law ancestry and the certainty that the precedent system provides continues to be the jurisdiction of choice not only for contracts, but also litigation and arbitration. This if anything may be bolstered as a result of Brexit, though city lawyers may need to refresh their knowledge of World Trade Organisation rules and its dispute resolution processes in short order!
Many of the impacts of Brexit are as yet unknown. Certainly the loss of talent from the City will have an impact, but there may be other unexpected consequences. For example, one detail of Brexit that is often overlooked is the effect on British intellectual property. Many of the UK’s beloved products will no longer have EU brand protection; Cheddar Cheese, Cornish pasties and Scotch Whisky amongst others may all suffer as a result.
The power and capability of the Royal Navy has been diminished through successive defence cuts, will the same happen to the City? The City historically has become innovative in the face of adversity – this may well be the case post Brexit, though a diminished and inexperienced staff may find this a challenge. However, if a critical mass of talent and institutions move elsewhere, the City may discover it is on a small damp island in the North Sea dislocated from its historic markets. Additionally, the unhelpful rhetoric of some of the political class will have done little to foster goodwill with our closer European markets.
Much of Britain’s colonial power was built with the assistance of the Royal Navy. Historical successes and a distinguished past will not be of much help to a post Brexit City of London, nor will a diminished Navy be of any help in a world were most of the City’s exports are service based. The challenge for the City is to retain talented staff, innovate and write a new history in the brave new world of post Brexit Britain.