The heat is rising in the City, and not just because of the recent heatwave.
On Wednesday, the normally mild-mannered chief of TheCityUK, the finance industrys main lobby group, unleashed his frustration at EU regulators over their failure to meet the UK halfway on securing a legal basis for the continuation of cross-border contracts post-Brexit.
After the Bank of England warned that derivative contracts with a notional value of £96 trillion are under threat, Miles Celic fumed “the biggest barrier to addressing this issue is the EU regulators failure to accept and get to grips with the risk”. Celic has been the Citys cool head on Brexit, but it seems even his patience is wearing thin.
He remains diplomatic, but make no mistake: the City feels keenly that it has done its part to ensure financial stability post-Brexit, whereas EU regulators appear to be dragging their feet.
Whether this is due to incompetence or a misguided political strategy, is up for debate, but whatever the cause it is remarkable, and alarming, that (to quote Mark Carney) “the EU has not yet indicated their solution to these fundamental issues” – not least because a failure to agree on a technical solution “would be expected to have more material impacts on the costs and availability of finance on the continent”.
In other words, refusing to cooperate on a framework of mutual interest will hurt EU businesses and member states more than it hurts us. Little wonder, therefore, that the association of German asset managers has said that “proper and unobstructed” access to London is crucial to their sector.
One of the reasons why London is the worlds number one financial centre is because its regulators and policy-makers are hugely experienced. They know what theyre talking about, and their EU counterparts would do well to engage with the Banks proposed “rock solid solution” – or theyll most likely live to regret it.
Is the City going to pot?
The calls to legalise cannabis are growing stronger – even former Tory leader William Hague thinks its high time for a change. Still, imagine my surprise to find my walk over London Bridge yesterday morning clouded by an unmistakable smell. I thought I was cracking up, but soon clocked a smartly dressed City slicker undistinguishable from other commuters were it not for the massive joint he was smoking. Is this what people mean when they talk of liberalising City regulations?
Xavier Rolet's agricultural insight
Most City-types on Twitter stick to their brief, rarely straying much beyond currency movements, central banking or share tips. Nice then, to see Square Mile wonk William Wright ask his Twitter followers why, having clocked the agricultural landscape on a flight back from Vienna, the fields were arranged in long, thin strips. Step forward Xavier Rolet, former LSE CEO, to explain: “the strips allow for crop rotation & diversification, offering a modicum of resistance to erosion…” Thanks, Xavier.
Charlie Elphicke pays attention to City A.M.
Before becoming a minister, Tory MP Steve Baker was an invaluable asset to parliaments Treasury Select Committee, often catching Bank of England officials and regulators off-guard with his own original thinking on economic theory. He even used to wave the occasional copy of City A.M. at Mark Carney to make his point. This tradition seems to have been picked up by Charlie Elphicke, who quoted us at length when grilling new MPC member Jonathan Haskel, noting that we offer more reliable guidance on rate rises than the Bank of England itself.
UBS's forecasting woes
Spare a thought for UBS, which claimed that their sophisticated modelling had concluded that Germany were the favourites to win the World Cup. Ten-thousand simulations and many hours of analysts work had gone into the prediction, which crumbled faster than a German fan watching Tuesday nights game against South Korea. Incidentally, UBS once claimed 1,000 staff would leave London as a result of Brexit. They since revised this prediction to 250. Tricky game, forecasting.