Advertisement

The Limits of the City’s Structural Power: The City’s Offshore Interests and the Brexit Referendum

  • Helen ThompsonEmail author
Chapter
Part of the Building a Sustainable Political Economy: SPERI Research & Policy book series (SPERIRP)

Abstract

Given the apparent structural power of the City of London and Britain’s finance-led growth model, the decision by David Cameron to hold a referendum on Britain’s membership of the European Union (EU) appears paradoxical when the dominant firms in the City have a long-standing interest in participating in the European Single Market. This paradox can be explained by the historical relationship of the City to the British state in terms of the offshore currency interests of the City and the particular problems created for the Cameron governments in defending the City by the politicisation by the Eurozone crisis of the City’s status as the offshore financial centre of the euro.

References

  1. Arnold, M. (2017, January 6). Bankers Sound Alarm over Brexit Consequences. Financial Times. Retrieved from: https://www.ft.com/content/d0af25ac-b49e-11e5-b147-e5e5bba42e51.
  2. Baker, A. (2010). Restraining Regulatory Capture? Anglo-America, Crisis Politics and Trajectories of Change in Global Financial Governance. International Affairs, 86(3), 647–663.CrossRefGoogle Scholar
  3. Baker, M., & Collins, M. (2005). London as an International Banking Centre 1958–1980. In Y. Cassis & E. Bussière (Eds.), London and Paris as International Financial Centres in the Twentieth Century (pp. 247–264). Oxford: Oxford University Press.CrossRefGoogle Scholar
  4. Barker, A. (2016, February 20). Britain’s EU Deal: The Results and the Verdict. Financial Times. Retrieved from: https://next.ft.com/content/7c90bfec-d76e-11e5-829b-8564e7528e54.
  5. Barker, A., & Stafford, P. (2015, March 4). Victory for UK over Eurozone Clearing Houses. Financial Times. Retrieved from: http://www.ft.com/cms/s/0/425aeee0-c24f-11e4-bd9f-00144feab7de.html#axzz3v32O1XRn.
  6. BBC News. (2013, March 15). Boris Johnson Defends City Bankers on French Radio. Retrieved from: http://www.bbc.co.uk/news/uk-politics-21800089.
  7. Bell, S., & Hindmoor, A. (2014). The Ideational Shaping pf State Power and Capacity: Winning Battles But Losing the War over Bank Reform in the UK and the US. Government and Opposition, 49(3), 342–368.CrossRefGoogle Scholar
  8. Berry, C., & Hay, C. (2016). The Great British ‘Rebalancing’ Act: The Construction and Implementation of an Economic Imperative for Exceptional Times. British Journal of Politics and International Relations, 18(1), 3–25.CrossRefGoogle Scholar
  9. Brunsden, J. (2015, September 30). European Commission Changes Tone over Financial Regulation. Financial Times. Retrieved from: https://next.ft.com/content/a20b200c-6787-11e5-97d0-1456a776a4f5.
  10. Burn, G. (1999). The State, the City and the Euromarkets. Review of International Political Economy, 6(2), 225–261.CrossRefGoogle Scholar
  11. Cadman, E. (2016, February 9). UK Exports Failures Highlights Difficulties in Rebalancing the Economy. Financial Times. Retrieved from: https://next.ft.com/content/ee6a8c1a-cf17-11e5-831d-09f7778e7377.
  12. Cadman, E., & Bounds, A. (2016, January 28). UK Manufacturing Retains Bright Spots Despite Overall Gloom. Financial Times. Retrieved from: https://next.ft.com/content/ff19bb16-c4fa-11e5-b3b1-7b2481276e45.
  13. Cain, P. J., & Hopkins, A. G. (2001). British Imperialism: 1688–2000 (2nd ed.). London: Routledge.Google Scholar
  14. Cameron, D. (2013, December 2). My Visit Can Begin a Relationship to Benefit, Britain and the World. The Guardian. Retrieved from: http://www.theguardian.com/commentisfree/2013/dec/02/david-cameron-my-visit-to-china.
  15. Conservative Party. (2010). Invitation to Join the Government of Britain. London: Conservative Party.Google Scholar
  16. Cottrell, P. (2005). Established Connections and New Opportunities: London as a Financial Centre 1919–1958. In Y. Cassis & E. Bussière (Eds.), London and Paris as International Financial Centres in the Twentieth Century (pp. 153–182). Oxford: Oxford University Press.CrossRefGoogle Scholar
  17. Culpepper, P. D. (2015). Structural Power and Political Science in the Post-crisis Era. Business and Politics, 17(3), 391–409.CrossRefGoogle Scholar
  18. Davies, A. (2017). The City of London and Social Democracy: The Political Economy of Finance in Britain, 1959–1979. Oxford: Oxford University Press.CrossRefGoogle Scholar
  19. Engelen, E., Ertürk, I., Froud, J., Johal, S., Leaver, A., Moran, M., et al. (2011). After The Great Complacence: Financial Crisis and the Politics of Reform. Oxford: Oxford University Press.CrossRefGoogle Scholar
  20. European Union. (2016). Draft Decision of the Heads of State or Government, Meeting Within the European Council, Concerning a New Settlement for the United Kingdom Within the European Union. Retrieved from: http://www.politico.eu/article/full-text-of-deal-changing-britain-eu-membership-brexit-referendum/.
  21. Evans-Pritchard, A. (2016, March 31). Britain Sacrifices Steel Industry to Curry Favour with China. Daily Telegraph. Retrieved from: http://www.telegraph.co.uk/business/2016/03/30/britain-sacrifices-steel-industry-to-curry-favour-with-china/.
  22. Green, J. (2017). The Offshore City, Chinese Finance, and British Capitalism: Geo-Economic Rebalancing Under the Coalition Government. British Journal of Politics and International Relations.  https://doi.org/10.1177/1369148117737263.CrossRefGoogle Scholar
  23. Haldane, A. (2010, March 30). The $100 Billion Question. Speech at the Institution of Regulation and Risk, Hong Kong.Google Scholar
  24. Hall, B., Barker, A., & Bryant, C. (2009, April 9). Sarkozy Claims Credit on Tighter Regulation. Financial Times. Retrieved from: https://next.ft.com/content/10b0bbee-1fb3-11de-a1df-00144feabdc0.
  25. Hay, C. (2011). Pathology Without Crisis? The Strange Demise of the Anglo-Liberal Growth Model. Government and Opposition, 46(1), 1–31.CrossRefGoogle Scholar
  26. Hay, C. (2013a). Treating the Symptom Not the Condition: Crisis Definition, Deficit Reduction and the Search for a New British Growth Model. British Journal of Politics and International Relations, 15(1), 23–37.CrossRefGoogle Scholar
  27. Hay, C. (2013b). The Failure of Anglo-Liberal Capitalism. London: Palgrave Macmillan.CrossRefGoogle Scholar
  28. HM Treasury. (2011, December 19). Government Sets Out Plans to Reform the Structure of Banking in the UK. Press Release.Google Scholar
  29. House of Lords. (2016). Brexit: Financial Services’, European Union Committee, 9th Report of Session 2016–17 (HL Paper 81). London: House of Lords.Google Scholar
  30. Howarth, D., & Quaglia, L. (2015). The Comparative Political Economy of Basle III (Working Paper). Retrieved from: http://speri.dept.shef.ac.uk/wp-content/uploads/2013/06/The-Comparative-Political-Economy-of-Basel-III-in-Europe-PDF-265KB.pdf.
  31. Howarth, D., & Quaglia, L. (2017). Brexit and the Single Financial Market. Journal of Common Market Studies Annual Review, 55(S1), 149–164.CrossRefGoogle Scholar
  32. Ingham, G. K. (1984). Capitalism Divided? City and Industry in British Social Development. London: Macmillan.CrossRefGoogle Scholar
  33. Jenkins, P., & Agnew, H. (2016, February 23). What Would Brexit Mean for the City of London? Financial Times. Retrieved from: https://next.ft.com/content/e90885d8-d3db-11e5-829b-8564e7528e54.
  34. Jenkins, P., & Jones, C. (2014, March 18). City of London Urges ‘Muscular Defence’ Against Eu Regulation. Financial Times. Retrieved from: http://www.ft.com/cms/s/0/6c540dd8-ae84-11e3-aaa6-00144feab7de.html#axzz3v32O1XRn.
  35. Jenson, M. D., & Snaith, H. (2016). When Politics Prevails: The Political Economy of Brexit. Journal of European Public Policy, 23(9), 1302–1310.CrossRefGoogle Scholar
  36. Johnson, B. (2014). Transcript of a Speech on 6 August 2014 at Bloomberg, London in Response to Receipt of Dr Gerard Lyon’s Publication of ‘The Europe Report: A Win-Win Situation’. Retrieved from: http://www.london.gov.uk/sites/default/files/bj-europe-speech_0.pdf.
  37. Jones, H. (2012, June 20). London Stung by Us Attack on Bank Regulation Record. Reuters. Retrieved from: http://uk.reuters.com/article/uk-britain-usa-regulation-idUKBRE85J0WV20120620.
  38. Le Corre, P. (2015). What the Budding UK-China Romance Means for the Global Economy. Brookings Blog. Retrieved from: http://www.brookings.edu/blogs/order-from-chaos/posts/2015/10/22-china-uk-relations-lecorre.
  39. Moore, E., & Wildau, G. (2015, October 20). China Completes First London Debt Sale. Financial Times. Retrieved from: https://next.ft.com/content/01bfe6aa-76e1-11e5-8564-b4bb9a521c63.
  40. Moran, M. (1990). The Politics of the Financial Services Revolution: The USA, UK and Japan. Basingstoke: Palgrave Macmillan.Google Scholar
  41. Munchau, W. (2009, December 9). Barnier Is No Threat but Shame About His Job. Financial Times. Retrieved from: http://www.ft.com/cms/s/0/5d14af9e-e29b-11de-b028-00144feab49a.html#axzz3uxsq6e5D.
  42. Parker, G., Pickard, J., Noble, J., & Barker, A. (2015, November 10). Cameron Sets Out Formal Demands to the EU. Financial Times. Retrieved from: http://www.ft.com/cms/s/0/50fc868a-8788-11e5-90de-f44762bf9896.html#axzz3v32O1XRn.
  43. PWC. (2012, July). The EU Financial Transactions Tax: Unprecedented Steps. Global FS Tax Newsflash. Retrieved from: http://www.pwc.com/sg/en/tax-newsflash/assets/taxnewsflash-201207.pdf.
  44. Quaglia, L., Howarth, D., & Liebe, M. (2016). The Political Economy of European Capital Markets Union. Journal of Common Market Studies Annual Review, 54(S1), 185–203.CrossRefGoogle Scholar
  45. Rachman, G. (2015, March 13). Transatlantic Spat Exposes Deeper Cracks. Financial Times. Retrieved from: https://next.ft.com/content/4c3195da-c971-11e4-a2d9-00144feab7de.
  46. Roberts, R. (2005). London as an International Financial Centre 1980–2000: Global Powerhouse or Wimbledon EC2? In Y. Cassis & E. Bussière (Eds.), London and Paris as International Financial Centres in the Twentieth Century (pp. 287–312). Oxford: Oxford University Press.Google Scholar
  47. Schelke, W. (2016). Financial Centre and Monetary Outsider: How Precarious Is the UK’s Position in the EU? Political Quarterly, 87(2), 157–165.Google Scholar
  48. Talani, L. S. (2011). The Impact of the Global Financial Crisis on the City of London: Towards the End of Hegemony? Competition and Change, 15(1), 11–30.CrossRefGoogle Scholar
  49. Thompson, H. (1996). The British Conservative Government and the European Exchange Rate Mechanism. London: Pinter.Google Scholar
  50. Thompson, H. (2009). National Economic Policy. In M. Flinders, A. Gamble, C. Hay, & M. Kenny (Eds.), The Oxford Handbook of British Politics (pp. 897–911). Oxford: Oxford University Press.Google Scholar
  51. Thompson, H. (2016). Enduring Capital Flow Constraints and the 2007–8 Financial and Eurozone Crises. The British Journal of Politics and International Relations, 18(1), 216–233.CrossRefGoogle Scholar
  52. Thompson, H. (2017a). Inevitability and Contingency: The Political Economy of Brexit. British Journal of Politics and International Relations, 19(3), 434–449.CrossRefGoogle Scholar
  53. Thompson, H. (2017b). How the City Lost at Brexit: A Historical Perspective. Economy and Society, 46(2), 211–228.CrossRefGoogle Scholar
  54. Thompson, H. (2017c). Returning to Democracy: The British Left and the Constitutional Temptation of the European Union. In R. Ekins & G. Gee (Eds.), Judicial Power and the Left: Notes on a Sceptical Tradition (pp. 62–66). London: Policy Exchange.Google Scholar
  55. Waterfield, B. (2009, December 21). Sarkozy ‘Will Use Michel Barnier to Advance French Interests’. Daily Telegraph. Retrieved from: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6861065/Sarkozy-will-use-Michel-Barnier-to-advance-French-interests.html.
  56. Watt, N. (2014, January 15). David Cameron to Demand EU Treaty Reform to ‘Save’ City of London. The Guardian. Retrieved from: http://www.theguardian.com/world/2014/jan/15/cameron-to-demand-eu-treaty-reform.
  57. Wong, S.-L. (2015, February). China’s Minsheng to Invest 1 Billion Pounds in New London Financial District. Reuters. Retrieved from: http://uk.reuters.com/article/uk-china-britain-property-idUKKBN0LI04X20150215.

Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.University of CambridgeCambridgeUK

Personalised recommendations