I confess that I do find LinkedIn generally useful in that it allows me to keep a sort of CV online and keep up to date on where former colleagues are now working. Other than that, it isn’t much use: the recruiters who, in the days of $100+ oil, used to contact me via LinkedIn were, to a man, utterly useless.
In the last year or two it has morphed into a kind of weak blog where various CEOs and other industry bosses post unconvincing articles which show only that expressing their thoughts in writing isn’t something they do very often. I received a link to one such post recently on the subject of Brexit:
As a European based in London, the events leading to Brexit have left me amused and irritated in equal measure. As long-term practitioner in FinTech, I am mostly worried about understanding their impact on my industry.
A hint for Managing Partners writing articles on LinkedIn: I haven’t got a clue what FinTech is, and if I don’t, nor will others. I’m not out of the first paragraph of your piece and I’m already having to use Google: it’s Financial Technology. Why not say that?
London is arguably the premier global financial centre.
Access to the rest of the EU is based on the acceptance of shared rules, policies and regulations, a process called “Passporting”. Should the UK wish to pursue a separate regulatory regime, EU Passporting in its current form will cease. Making London the access point to a market of 64m people with a $2.8T GDP — still sizeable but not nearly as large as what it is today.
That last sentence doesn’t make much sense, following as it does a full stop. Did anyone proof-read this before publishing? Anyway, you’ve just said London is the premier global financial centre, so why assume post-Brexit it will only be the access point to a market of 64m people?
In the meantime, the EU will undoubtedly continue on its cross-Europe harmonising drive, supported by initiatives like the Single Digital Market programme, making it even more desirable for start-ups, FinTech and otherwise, to be located in an EU country.
Really? Cross-Europe, harmonising EU directives are being welcomed by start-ups? I can see the potential for rent-seeking in the increasingly lucrative field of “compliance”, but genuine start-ups? Which ones?
Both Paris and Berlin have already started positioning themselves as an ideal alternative to London.
Have they? Have the French thrown that veritable thicket of employment regulations in the bin, then? And switched their working language to English? Or are they just hoping banks will not notice all this when doing their cost-benefit analyses?
English, a strong legal system and a good quality of life for expats may no longer be enough to make London the natural choice if access to rest of the continent is curtailed. Large corporates will begin to consider Dublin, Paris, Barcelona and Berlin more readily than before, depriving the UK from the talent pool that global players develop in the markets they settle in.
Yeah, we keep hearing how great Paris and Berlin are for businesses. One is tempted to ask why this was such a closely-guarded secret until Brexit. Others may wonder why Canary Wharf is rammed full of Frenchmen making hay in British-based banks instead of grinding out a 40-year career in BNP or SocGen in La Defense. Perhaps they went for the food and weather?
The European “Right to Move” has enabled foreign firms based in the UK to easily hire talented individuals from a pool of over 500m people. As these people got hired, they improved the quality of the already outstanding UK workforce, creating more interesting jobs that in turn attract more talented people. This process has become a virtuous circle making London one of the most dynamic workplaces in the world.
It is true that London has been able to attract top talent from the EU, and this has been made easier by the rules on free movement. But anyone who’s taken the London Underground will have noticed it is chock-full of Russians, Chinese, South Americans, Africans, Middle Easterners, and just about anybody else. Insofar as the normal British immigration rules are an impediment to companies being able to recruit foreigners from outside the EU, it doesn’t seem to be much of an obstacle.
The current regulatory complexity and costs of hiring non-EU talent would be extended to EU citizens.
And would those additional costs outweigh the costs of moving to France and hiring people there? I think we can answer that one already.
Parliament forecasts that between 2013 and 2017 the UK will need to find 745,000 workers with digital skills.
I don’t mean to be overly mocking, but we’re currently a quarter of the way into 2017. It’s probably taken Parliament until now to get their forecast out. Therein lies the danger of relying on politicians for business advice.
One of the reasons the digital revolution has hit financial services so late is the weight of regulation. The UK regulators are unusually progressive and keen supporters of innovation.
Firms based in the UK benefit from being regulated by a forward-thinking regulator with oversight that stretches across the EU.
Without regulatory “Passporting”, a UK FinTech firm with EU ambitions, would have to open subsidiaries or relocate to an EU country. These additional costs and complexity will inevitably lead to slower growth, need for more capital and eventually difficulty in attracting investment at the valuations of the pre-Brexit days.
So the British regulators are smart and forward thinking compared to those in the rest of the EU, and London benefits from this, as does the rest of the EU. Therefore if Britain leaves the EU, Britain will suffer. Right. Of course, there is no mention of the fact that one of the real concerns among those who voted Leave was that the EU was seeking to impose regulations on the City of London which would have removed any advantage it currently enjoys over the rest of Europe.
London is a leading location for entrepreneurs seeking venture funding.
Yet apparently, post Brexit, this will switch to Paris where companies with more than 50 employees are compelled to establish works councils:
Any company with at least 50 employees must set up a works council (CE). This committee is composed of representatives of the staff and trade unions, with a mandate of 4 years maximum. It is chaired by the employer. It has economic, social and cultural attributes. To carry out its missions, it has hours of delegation.
Which is why my colleagues and I get subsidised lunches, half-price cinema tickets, and travel vouchers courtesy of my employer. I’m sure London’s fleet-footed financial startups are looking forward to administering all of this at their own expense. Sure, many of these companies will be below the 50-person threshold, but if that’s the case then we’ll not need to worry about tens of thousands of jobs being transferred.
Secondly, if business will have to deal with a tighter talent pool they will either grow slower or have to pay more for staff.
Does anyone seriously think the talent pool for financial services will be tighter in London post-Brexit than in Paris, Berlin, or Barcelona?
All things considered it would seem unlikely that the role of London as Europe’s financial and tech hub will not be diminished.
Yes, it will be diminished just as me flushing the toilet diminishes the water level in a reservoir somewhere. The important question is by how much? Unless somebody is prepared to properly look at the costs and difficulties of transferring operations to European cities, we ought to assume they are engaging in little more than speculation and scare-mongering. Which is probably why they are writing on LinkedIn in the first place.