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In his book, The Death of Gentlemanly Capitalism, Philip Augur recounts a dinner conversation he had with a future Governor of the Bank of England in which they compared the rising position of American investment banks in the City of London to the Wimbledon Tennis Championship.
His companion told Augur not to worry as although Wimbledon is dominated by overseas players, the tournament is held in London, staffed by locals and still generating much prestige and revenue for the UK. He argued that it was in a similar position to the City of London, which would remain the dominant European financial centre. Augur disagreed, fearing that British brokers would suffer the same fate as the manufacturing sector, where the failure of firms led to the UK losing control of strategic industries.
When the book was first published in 2000 Augur wrote that all of the City of London’s top ten brokers and nine of the top ten corporate finance houses were American or Continental European. The situation remains the same in 2023 except that the UK now faces increased competition from other European centres following its departure from the European Union.
As a result, in June this year the UK government signed a Memorandum of Understanding on financial services which sets out plans for UK/EU cooperation and was welcomed by industry bodies such as The Investment Association and The City of London Corporation.
On 10 July Jeremy Hunt, Chancellor Of The Exchequer, laid out the UK government’s plans for the financial services sector in its Mansion House reforms. They include the “Mansion House Compact,” which commits many of the largest Defined Contribution pension schemes to allocating at least 5% of their default funds to unlisted equities by 2030; doubling the existing local government pension scheme allocations in private equity to 10% by 2030; draft legislation on prospectus reforms to encourage more listings and removing the requirement to unbundle research costs by the first half of next year. In addition, the UK will establish a new “intermittent trading venue” that will improve private companies’ access to capital markets before they publicly list.
This year no British player made it through to the second week at Wimbledon in either the men’s or women’s singles. The UK government will be hoping that the City of London is not already out of the tournament and that its reforms will help the financial services industry remain a champion.
