Letter from London: Whose Round in the Square Mile?

Karl Marx walking tours of London. Photo: Jeffrey St. Clair.

Last week I was able to sneak behind financial lines, so to speak, to communicate with someone who once hit jackpots in the City of London, and who now lives abroad. He agreed to speak on condition of anonymity. He knew why I wanted to hear his take on things. The City of London has never been so unwell, by which I mean the ancient financial hub that for so long has been a commercial world leader, an ever-pumping, ever-pimping, heart of business, now in urgent need of an electric charge to restore its normal heartbeat.

I can well remember in the past Frankfurt’s efforts to snatch the City of London’s crown. No way, rebuffed London at the time, strutting its stage like capitalism at its purest, grisly, disruptive, market dominant. Even having witnessed some real conflict myself, it struck me as supremely ugly and aggressive as a working environment. I wrote briefly about it from both a Frankfurt and City of London point of view, two cities at whose press conferences I was like a fish out of water, writing about Deutsche Bank acquiring Morgan Grenfell in 1990, as well as ‘Honkers and Shankers’ (HSBC) taking over Midland Bank in 1992.

Today, the City of London Corporation, or ‘The Square Mile’, from Temple to the Tower of London, location of so much previous UK financial gravitas, is groaning under the weight of diminished confidence. According to the Organisation for Economic Cooperation and Development (OECD), the UK is about to become one of the poorest performing advanced economies both this year and next — with only Argentina worse. Despite inflation falling last month, how it must sting what skin still remains in the game.

I asked my illuminating contact on the other side of the Atlantic to describe the City of London when he first knew it. He jumped straight in, as people do with a full plate, admitting it was a slightly wild place, at least on the trading floors of the big banks where he worked from the late 90s: ‘Big personalities and memorable characters with a lot of fun and shenanigans when the serious work wasn’t being done, as well as when money wasn’t being lost.’ He told me a lot of people at the time were from working-class backgrounds, who made no effort to hide their upbringing, without university degrees, and who had worked their way up from nothing into big jobs paying well into seven figures. ‘It was a very exciting and enjoyable environment to work in. People loved the industry and their days were not absorbed by compliance and diversity courses.’ Hot topic, I was thinking. ‘Could it be an intimidating environment for some? Undoubtedly. But probably not for long. It was raucous rather than abusive.’

He said it was a very different culture today, vastly more ‘professional’, very few working-class accents, and indeed few British accents at all, as it was now a very international workforce, though restricted overwhelmingly to the products of the elite global universities. ‘Almost no shenanigans or high jinks even at the end of the day. Everyone is terrified of HR and losing their jobs because of a single badly judged remark.’ He said pay was still great by any normal standards but nothing like what it was, not when judged relative to modern living costs, school fees and modern house or asset prices. (‘As is the case for most professions I guess,’ he conceded.) ‘The industry is not fun to work in and people don’t enjoy it generally. They are there to milk some big money for a chunk of their career and for a few to get a big status job at a big bank.’

It was interesting to see a normally closed door slowly open like this. ‘It is important to remember that people on trading floors are under a LOT of stress and this does not co-exist well with a sterile and highly controlled environment,’ he said. ‘People need to ‘let go’ a little and lighten up when they can.’ Then he said: ‘Just trying to give some perspective here.’

As this person lives off-shore, I asked why so many high-worth individuals have recently left the UK. ‘The tax burden is now appalling,’ he explained. ‘Inheritance tax in particular terrifies wealthy people as they see a real threat of much of what they worked so hard to build over their lifetimes going straight to the government rather than to their families, if they have an accident or get terminally ill before they have time to make tax planning arrangements over many years,’ he said.

He also claimed the country was not safe anymore. While I am not entirely in agreement with him on this, how we ‘feel’ about a place matters far more than any facts on the ground. ‘Many people don’t feel safe even in the good parts of London,’ he continued. ‘Public services are dreadful. Nobody trusts the NHS. And private healthcare has never properly developed in the economic shadow it casts.’ His thoughts grew flintier still, though I knew exactly where he was coming from: ‘People you encounter every day tend to be miserable and angry, especially after Covid.’

It was compulsive and rare for me to hear someone’s views like this. He went on to say property rights, always believed to be one of Britain’s greatest assets, were now seen as diminished. ‘You have to understand how big a deal this is for very wealthy people whose greatest fear in life is having their assets taken from them. Even a very, very slightly elevated risk of this happening terrifies them. This elevated fear arose principally because of the confiscation of Russian assets from those who were not themselves lawbreakers here. None of us really care about scumbag Russian oligarchs getting fleeced by the government or anyone else, but be in no doubt that a major rubicon was crossed when this happened that sent earthquakes through the wealthy elite who kept their assets, especially London property, and themselves in the UK.’

Meanwhile, Labour leader Sir Keir Starmer had just met with current French president Macron to discuss the possibility of the UK now rejoining the EU as an associate member under surprise plans for the bloc’s expansion drawn up by France and Germany.

If Labour got in, I had to ask therefore, would it improve things for London and the UK? ‘Labour will have the support of the civil service who have at best not supported the government in recent years and at worst have actively sabotaged it at every turn,’ he said. ‘They might also have a much greater latitude to reform the decaying, dysfunctional and grossly wasteful parts of the state machine that desperately need reform. For example, the NHS, Home Office, and DVLA (Driver & Vehicle Licensing Agency). Can Starmer get public sector employees back off their couches and behind their desks? Will Starmer have the mettle to make these difficult decisions? I am not confident.’ He suggested that what Starmer will have to do is admit to demands for greater public spending when the country desperately needs far less to stay solvent. ‘Can he resist this?’ he said. ‘Can he address the idleness and sickness welfare catastrophe that Covid left us with, and which is literally bleeding our economy to death as millions sit at home claiming to be ill?’

I chose not to come back to him on this. To be fair to him, I was trying not to be here to judge. That was for him to do, if he wished. Instead, we moved to the time when Canadian Mark Carney was head of the Bank of England. I knew this was another bugbear for him. ‘Carney,’ he said, ‘was a major proponent of persistent and extreme monetary largesse at a time when the US Federal Reserve and European Central Bank were leading the way. The UK was printing money in mind-boggling quantities year after year, even when the economy and stock market were ticking along strongly. This now defies belief. What the hell were we doing? This money was not being invested in infrastructure or long-term economic development projects. It was just meeting general government expenditures, much of it welfare and pensions. Carney pulled every possible lever at the Bank of England to pump more lending into the housing market and encouraged every possible lending scheme to make this happen. And this whilst the housing market was roaring. Why? Undoubtedly there was a coordination of the leading global central banks to try and inflate the global economy. And we weren’t going to leave that exclusive party when the monetary booze started flowing. But my god at what cost to us now? Saddled in debt we may well never repay and which could well bankrupt us as a nation.’

I felt like I had pulled up a rock and discovered what the men in suits really possess as opinions. Only this person was more likely to be found in a fleece in a helicopter. He is also perhaps unexpectedly generous, I remembered, about creative people. So I asked him what he would change to restore growth, and he said the state had to shrink because taxes had to be slashed for economic growth to occur. ‘Otherwise talent and capital will keep bleeding away in a vast torrent to far more friendly places. There is no debate to be had about this. The only question is what you cut. The welfare budget is grossly unjustifiable and a scalpel needs to be applied. We cannot afford illegal or uncontrolled immigration, and the crippling burden it puts on the NHS, housing and the public sector.’ I was thinking about Jeffrey St Clair’s John le Carré quote last week: ‘Our power knows no limits, yet we cannot find food for a starving child, or a home for a refugee.’

At the same time, Prime Minister Rishi Sunak had just said he would save the country from the ‘unacceptable costs’ of net zero by cutting back on major environmental policies, disappointing many who believed it was yet another case of UK politics adopting something it doesn’t even believe in but thinks will garner votes. My contact was not finished: ‘Our extractive industries should be completely opened up. Whether North Sea oil and gas, Dorset or Lancashire oil shale, Cornish tin and tungsten or Halite fertilizer from beneath the Yorkshire moors, we desperately need this natural bounty as we never needed it before. Our current account deficit is eating us alive. We bleed economically from money pouring out every day to pay for imports when we export very little.’ He was nothing if not passionate, and I told him I was grateful for his frankness, but I also could see how riled this would make some readers. ‘Extractive industries make a big dent in this problem and fast. We can have the most modern and environmentally advanced resource industries but the green lobby must be given no quarter here.’ While I wanted readers to make up their own minds, I wondered if such bullishness was not counterproductive to his argument. ‘Another thing about the extractive industries, and which I think is important to state, is the absurdity of Britain, given our crippling current account deficit, paying others abroad to bring us the minerals and energy we use rather than extracting our own. Generating jobs and GDP in their countries rather than our own. And having to burn that much extra fuel oil in ship engines to transport it to us.’ He had an interesting point at the end there.

I next asked if the UK’s reputation was in any way recoverable? ‘Absolutely,’ he said. ‘It’s there for us to recover it. But are we willing to take the pain and make the difficult decision that would recover it? The thing is that the UK has had no real economy for decades. Our economy has been largely illusory since the Thatcher years when our industrial base was wiped out — for which the unions were as much to blame as she was — and never really replaced with anything more high-tech.’ He explained that economic activity had overwhelmingly consisted of borrowed money plowed into construction and consumption. This he believed was not sustainable: ‘It leaves no industrial or technological economic engine in its wake.’ So what is the legacy of it? ‘A shitload of debt,’ he said, ‘landfill sites full of decaying consumer goods, and a lot of badly built properties not really suitable for current population requirements.’ If that is the case, how did the illusion of an economy survive this long? ‘A monstrous bounty of North Sea oil and being a global financial leviathan during the greatest ever period of global financialization,’ he said. ‘A London property boom didn’t hurt either.’

Just when I thought he was done, he had one final point: ‘There is another rabbit hole which exercises me greatly,’ he said. ‘In losing most of our manufacturing industry, our extractive industries, our armed forces and our agriculture, we have become a small nation overwhelmed by its vast metropolitan core whose aesthetic tendencies means it consciously or otherwise holds these tough, gritty and often dirty and dangerous industries and professions in contempt. Despite these being essential for our economic survival, and where once they provided the greatest ladder of social mobility for talented working-class people without the polish or connections to thrive. I think this is why class as an issue has come back as it has.’ One example he cites is London University banning resource companies from campus recruiting, as others believe that they should.

I began this piece by saying the City of London was unwell. Whenever London journalist Jeffrey Bernard failed to file his Low Life column in The Spectator, it would say ‘Jeffrey Bernard is Unwell’. It even became the title of a successful play written by the late — and always kind to me — Keith Waterhouse. One day, of course, Bernard never did get well again. The column, or his version of it, ended. Will we be saying the same one day about the City of London? Or in the end will this precise downfall be what makes the world want to invest in it all over again?

Peter Bach lives in London.