May Insists Banks of ‘Huge Value’ as They Step Up Plans to Exit

  • Prime minister gives strongest backing yet to City of London
  • May says she believes banks will stay in U.K. after Brexit

May: Financial Services of 'Huge Value' to U.K. Economy

Theresa May offered her strongest support yet for London’s financial district, insisting that banks are of “huge value” to the U.K. economy as executives signaled they were accelerating plans to move staff abroad after Brexit.

“I value financial services in the City of London, and I want to ensure that we can keep financial services in the City of London,” the prime minister said in an interview with Bloomberg editor-in-chief John Micklethwait at the World Economic Forum in Davos, Switzerland, on Thursday. “I believe that we will do just that.”

The comments represent the warmest statement of backing that May has made about the financial sector in her six months as premier, suggesting a shift in emphasis toward an industry that pays 60 billion pounds ($74 billion) to 67 billion pounds in taxes each year. May has until now focused on warning the global elite that its excesses can’t continue.

What has changed is that bankers have begun to openly outline their own plans to leave London following May’s speech on Tuesday laying out a full departure from the European Union single market. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said on Wednesday that “it looks like there will be more job movement than we hoped for,” while HSBC Holdings Plc CEO Stuart Gulliver said staff generating about 20 percent of London revenue may move to Paris.

Lloyds Banking Group Plc, Britain’s largest mortgage lender, is set to choose Frankfurt as its base for guaranteeing ties to the EU, according to a person familiar with the matter.

Huge Value

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May’s message in Davos has been conciliatory, saying she wants to work with business. “Financial services are of huge value to the British economy,” she said. “And of course the services that fit around the banks, asset management companies and insurance companies, are important to us too.”

In the interview, May said the 2008 crisis had led to a shift away from the economy’s reliance on finance. “Financial services have always been important in the British economy,” May said. “Post the events of 2008, there has been a rebalancing, not just in the U.K., but elsewhere in terms of financial services. Other sectors are also of course of value to us in the U.K.”

For more on Davos, see our special report on the World Economic Forum 2017.

Positive Mood

May is trying to position Britain as the advocate of global free trade while taking the country out of its biggest free-trade area. In her interview, she insisted she’d had “positive meetings” in Davos with CEOs of banks and technology companies.

“The message I’ve brought here to Davos is that Britain outside the European Union, we want to build a truly global Britain,” she said.

German Finance Minister Wolfgang Schaeuble earlier cautioned the U.K. against a “race to the bottom” on corporate taxation as it leaves the 28-nation bloc, saying that international agreements to combat the practice will apply equally post-Brexit as now.

“A truly global economy must think of global governance,” Schaeuble said in an interview in Davos, playing on May’s phrase. “You can’t race to the bottom on taxes as a truly global economy.”

Government Role

May also rejected any suggestion of a contradiction between championing free trade and state intervention, saying that government had a legitimate role and should be ready to intervene when markets are not working properly and when businesses do not play by the rules.

“I do believe that if we don’t do something about this, if we don’t show that everybody plays by the same rules -- that’s a particular concern I think people have -- then the trust in business, the trust in globalization, in free markets, in free trade, I think will erode,” she said.

“We already see in the U.K. in the lower income groups that trust in business is down at 35 percent. I think it’s important for us to re-establish that trust. Part of that is people feeling, not just that markets are working properly, but that everyone is playing by the same rules.”

Asked which markets were failing and needed government intervention, May said: “We’re looking at the moment at how markets are operating in the U.K.”

May added: “Those of us who believe that free trade is an important part of growth, those of us who believe enterprise is the engine of prosperity, we need to ensure that people have confidence in it.”

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