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Leaving Europe Is a Risk the U.K. Shouldn't Take

Michael R. Bloomberg, the former mayor of New York City, is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News. He is the UN secretary-general’s special envoy for cities and climate change.
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The British electorate does not need Americans to tell them how to vote in the June 23 referendum, and I wouldn’t dare try. I have always had great admiration for the British people -- and great respect for the country’s democratic traditions. But from across the Atlantic, we Yanks are watching the campaign closely -- and many of us who have deep personal and business ties to the U.K. can’t help but take a close interest.

The special relationship between the U.K. and U.S. holds a special place in my heart, and not just because I had the great privilege of being named an honorary Knight of the British Empire by the Queen in 2014. I consider London my second home, my daughters hold British passports (thanks to their British mother), the company I founded employs nearly 4,000 people here, and we have long supported some of London’s world-class cultural institutions.

David Cameron and Boris Johnson, while on opposite sides of the debate, are both good friends and have assured me that no matter what the outcome of the vote, thanks to the Freedom of the City of London I was awarded in 2008, I will still have the right to herd sheep and cattle over London Bridge, and to carry a sword around Piccadilly Circus or anywhere else. Thank goodness for that!

Of course, there is so much more at stake in next month’s referendum, economically and politically -- first and foremost for the British people, but also for Americans and the world. I recognize that, as in most political campaigns, some of the rhetoric on both sides has been wildly exaggerated. But there is no disputing one fact: Given the uncertainty of Brexit’s potential impact, a vote to leave is a risk. The question is: Is the risk worth taking?

I should note: I’ve never been averse to taking risks. In 1981, I started a company to create a product that had no demand, with technology that didn’t exist. Twenty years later, I ran for mayor of New York when no one thought I had even the slightest chance of winning. Against the odds, both decisions turned out better than I could have ever dreamed of. But over the course of my career, there are certain risks that I have refused to take (including running for U.S. president this year) after weighing the evidence and concluding that they were likely to produce more harm than good. Some risks are just not worth it.

As the founder of a business that specializes in financial data, news and analysis, I have carefully evaluated the question of Brexit and concluded that the risks involved are troubling. No one can say for certain if an “Out” vote would shrink the financial services industry, which accounts for about 12 percent of the U.K.’s economic output and the bulk of our customer base. But in my conversations with chief executives of banks and other industry leaders, with rare exceptions, they see Brexit as a serious complication that could lead some jobs to shift to the continent over time. Some in Frankfurt and Paris are rooting for Brexit for this reason.

Bloomberg is building a new European headquarters in London. Whatever the outcome of the vote, we are committed to the U.K. But if some of our clients move operations across the channel -- and there is a good chance that some foreign exchange and derivative trading will migrate overseas -- we may need to move more resources and personnel there, too. In addition, as the competition for talent intensifies, restrictions on free movement could force us to divert resources to other global technology centers, leaving fewer job opportunities for skilled British workers.

I also worry that Brexit will leave our U.K. employees worse off. No one knows for certain how the U.K. would fare in trade negotiations with the European Union, but we know Brussels would hold substantial leverage, given that the U.K. is far more dependent on the EU for exports than the EU is dependent on the U.K. What price EU leaders would exact is impossible to predict, but deterring other countries from breaking away -- not to mention the opportunity to punish an old rival -- is likely to discourage them from looking sympathetically upon Britain. Even if fair terms are secured, achieving them may take years, and families may feel a pinch well into the next decade.

Those are risks that, as an entrepreneur who has invested heavily in the U.K., I find unsettling. And as an American who has served in public office and seen the importance of international cooperation, the prospect of the U.K. leaving the EU is even more worrisome.

At a time when liberal democracies are threatened by anti-Western terrorists, it is critical that we closely coordinate on security policies and intelligence. In the aftermath of multiple terrorist attacks, British leadership on counterterrorism and intelligence is all the more crucial. Yet leaving the EU would diminish the U.K.’s ability to lead on security matters. Strategically, having the U.K. in the EU is a vitally important asset for the U.S. The U.K. and U.S. will always have a special relationship, but Brexit would leave the U.K., America and the rest of the world in a weaker position to combat terrorism, promote trade, and confront other global challenges including climate change.

In the face of foreign threats and domestic economic struggles, it is inevitable that some will call for a retreat from international affairs. In the States, retreat from cross-border trade has unfortunately been a theme of candidates in both parties. One in particular, Donald Trump, has gone further, by scapegoating our foreign neighbors and competitors. Recently Trump has said that if he were casting a ballot on June 23, he would vote to leave.

I’m not advising the British electorate how to vote. But for centuries the British people and the world have benefited enormously from a confident, forward-looking and outward-facing U.K. -- and based on my desire to see the U.K. and U.S. both grow stronger in the years to come, I’m hoping that tradition continues.

To contact the editor responsible for this story:
David Shipley at davidshipley@bloomberg.net