Ivan Fallon: Even amid Brexit, banks and tech companies such as Apple find there’s no place like London

Apple and other major banks have not fled the Big Smoke like Remainers warned they would.

Apple’s chief executive Tim Cook, who visited the company’s new headquarters in London last week, thinks the British capital is ‘an unbelievable place to live today and it’s going to be an unbelievable place to live tomorrow’. Matt Dunham / AP PhotoShow less

Tim Cook, the chief executive of Apple, was in London last week to view his major new European headquarters in Battersea, where he plans to relocate all of his 1,400 London staff. Apple will take half the space in the landmark building, now taking shape inside the old power station on the South Bank, when its renovation is completed in four years’ time.

Brexit, Mr Cook says, in no way deters him. “We’re a big believer in the UK. We think you’ll be just fine.”

London doesn’t actually need his reassurance right now, but it is nice to have it and one never knows about the future. Mr Cook, the successor to Steve Jobs, thinks the British capital is “an unbelievable place to live today and it’s going to be an unbelievable place to live tomorrow”. To prove he means it, he has “doubled down on our headquarters here. It’s going to be beautiful.”

He also said nice things about Paris a few days earlier, telling Le Figaro that it's the "best place to discover and chat" with musicians, graphic designers and photographers who use Apple products.

Discover and chat? Musicians and designers? That’s an awfully long way shy of his commitment to London.

Apple has created an entire new industry based around its iOS (mobile operating system) development programme. Mr Cook himself reckons that the industry employs maybe a quarter of a million techies and is the fastest-growing industry in Britain today.

What’s more, it is basically Brexit-proof – except for one aspect. Just as Mr Cook, like most of his Silicon Valley peers, hates Donald Trump’s proposed restrictions on immigrants, so he opposes limits to the free flow of people across Europe. “To be the most creative and innovative, tech depends on people from all walks of life coming together,” he said while in the UK.

London has traditionally rated highly in that count. “It’s such an attractive place to live and, historically, has been very welcoming to all people,” Mr Cook said after visiting Theresa May in Downing Street to pass on the same message.

Eight months after the Brexit vote, there is virtually no sign of the mass exit of banks and international companies which the remainers – or “remoaners” as they (we) are now labelled – gloomily prophesied.

Far from it – huge developments in the City and Canary Wharf, briefly suspended, are going ahead again and new ones are planned as if nothing had changed. The economy is holding up remarkably well, with the latest figures showing an unexpected surge in manufacturing exports at the end of last year, which narrowed the trade gap and showed that expansion in the economy is more balanced than previously thought.

The City of London, which was supposed to be the epicentre of the mass exit, is taking comfort from the feedback of bankers who have tested the waters in other financial capitals.

A group of large global banks last week told French politicians, in what one of them described as “brutally clear language”, that Paris has almost no chance of capturing serious business from London without radical reform of the country’s labour code. “As the saying goes,” said one of them, “it takes three days to fire someone in London, three months in Switzerland and three years in Paris.”

On top of that, Marine Le Pen, riding high in the polls, promises to take France out of the euro zone. This would cause complete chaos in the economy and probably finish off the European Union. Fortunately (for France), she is unlikely to win, but then people also said that about someone else recently.

Frankfurt and Dublin are widely considered the other potential winners of London “refugees” as Britain loses its “passporting” rights in the EU services industries. Dublin at best will be a niche player, attracting hundreds rather than thousands of migrants to its financial centre. Frankfurt is obviously a more serious threat, but then it always has been – ever since I can remember, pundits have been arguing that Frankfurt was about to eclipse the British capital, but it has never happened and in my view never will.

The German regulator BaFin held a “Brexit workshop” in Frankfurt this month that was heavily attended by British bankers. The message was pretty blunt: “Foreign banks are welcome here, but it is not good enough to mail in a brass plate and set up a sales unit,” Peter Lutz, BaFin’s chief of banking supervision, told them. Any bank subsidiary based in Germany would have to be managed in Germany itself – and would be subject to the full panoply of German regulations.

London-based banks are not so keen on that. The Bank of England’s slightly more relaxed, and familiar, regulatory regime seems suddenly very friendly.

Ivan Fallon is a former business editor of The Sunday Times and the author of Black Horse Ride: The Inside Story of Lloyds and the Financial Crisis.

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