The City of London’s ‘Brexiteers’ Regroup for Battle
Almost two decades ago, property investor Richard Tice was among a group of financiers engaged in a campaign to stop Britain from joining the euro single currency. Now he is fighting another battle – to bring Britain out of the European Union.
Tice says history has vindicated his stance on the euro. London has thrived as Europe’s leading financial center despite being outside the single currency. That is good reason, Tice says, to listen to him when he says British business will prosper if Britons vote to leave the European Union this month.
Tice’s views on Brexit put him in a minority in the financial services industry with most believing this very significant part of the economy – it accounts for about 10 percent of GDP – has the most to lose from a ‘Leave’ vote.
He is also at odds with Prime Minister David Cameron, Treasury chief George Osborne and Bank of England Governor Mark Carney, all of whom argue Britain is better off inside the E.U. (as do Barack Obama and IMF head Christine Lagarde).
“Let’s give due weight to those who said we shouldn’t join the euro in the first place, we were right then and we are right now,” said Tice, interviewed at a hotel bar near his office in London’s wealthy Mayfair district.
Tice is joined in his campaign by other business leaders who campaigned against the euro.
The ‘Brexiteers’ include the founders of some of the biggest stockbroking and fund management companies – Stuart Wheeler, owner of spreadbetting firm IG Group (IGGRY), Peter Hargreaves founder of stockbroker Hargreaves Lansdown (HRGLF), asset manager Fundsmith’s Terry Smith and Oliver Hemsley of broker Numis.
They see parallels with when then-Prime Minister Tony Blair, the country’s main business lobby group and international companies based in Britain wanted to join the single currency.
The same institutions are now against an exit from Europe.
Wall Street banks Goldman Sachs, Morgan Stanley, Citi and JPMorgan have donated six-figure sums to the campaign for the country to stay in the E.U. and the City of London Corporation, which runs the financial district, also backs remaining.
But the supporters of leaving say the warnings that emerged during the debate around the euro are being used again: there will be economic chaos, diminished trade opportunities and a withering in London’s role as a premier hub for global business.
The campaign to keep Britain in Europe has said leaving would result in recession. The ‘Out’ campaign says only leaving the EU can slow high levels of migration.
Since Britain rejected replacing the pound, the number of people working in London’s financial district has risen by about 20 percent, according to the City of London Corporation.
“Not only were they wrong, they were spectacularly wrong on the biggest macro-economic decision that we faced since the Second World War,” Tice said. “The track record of these people is really important. It is really woeful, woeful.”
Alongside Tice on the list of 1,000 members of “Business for Sterling,” the cross-party campaign group launched in 1998 to challenge the perception that business supported the euro, was Roger Bootle, founder of research firm Capital Economics.
“I remember well all the people who said if we were not in the euro that would be it,” Bootle told Reuters at his office in Victoria. “Actually, what happened was it strengthened the City. It killed all the minor financial centers: Amsterdam, Vienna, Milan… We all know the euro business moved to London.”
The euro zone crisis may have drawn attention to the deficiencies of the single currency, but many economists say for those who joined it has removed the exchange rate risk and given access to an expanded single market.
Bootle concedes that some financial services companies may leave London in the event of a ‘Brexit’, worried that they will be less able to operate across the European Union from a London base. But, he says, staying in the EU carries its own risks in the form of increased taxation and regulation.
Bootle argues London should anyway be setting its sights beyond the continent and refocus on faster growing markets in Asia, Africa and the Americas.
Nick Herbert, the former chief executive of Business for Sterling, and now a pro-E.U. Conservative parliamentarian, dismisses the parallels between the campaign against the euro and leaving the EU.
“The campaign against joining the euro was clear that we should be in the single market, but outside of the euro,” he said. “They are now rewriting history because it is the only argument they have.”
Those in favor of leaving say europsceptics’ employees at large financial companies are being gagged from speaking out.
While Hargreaves, for instance, is vociferous about the potential benefits of Brexit, the investment fund firm that he part owns has distanced itself from the debate. Hargreaves Lansdown has said it is “neutral” on the referendum.
Helena Morrissey, chief executive of Newton Investment Management, part of BNY Mellon has been outspoken in editorial opinion pieces and public debates, arguing Britain could thrive outside the E.U.
She has coined a phrase “the closet Brexiteer,” referring to what she sees as City workers feeling uncomfortable expressing their own views if they differ from those of their employer.