City hypes and types gathered at Haberdashers’ Hall in London’s Smithfield area this October at the annual MondoVisione exchange forum, hearing from experts on topics ranging from cybersecurity, the impact of Brexit, moves in green finance as well as digital transformation and innovation - all offering insight to the world of tomorrow.
The annual event, highly regarded among movers and shakers in The City, this year managed to pull off a bit of coup by getting Gina Miller, the Guyanese-British business owner and activist who initiated the 2016 R v Secretary of State for Exiting the European Union (EU) court case against the British government.
This was over its authority to implement Brexit without approval from Parliament. And, that was followed this September by Miller and a team from Mischon de Reya law firm with David Pannick QC, pulling off a second victory with the Supreme Court ruling that prorogation of Parliament was illegal.
In addition and for good measure, the MV organisers led by Herbie Skeete, a former Reuters’ executive, inveigled Martin Wolf, the FT’s chief economics commentator, to give his views in an engaging keynote titled ‘Fragility & The Future - What Next for the World Economy?’. Some of his thoughts a bit later, but suffice to say the prognosis is somewhat scary, so you might want to take note.
Haberdashers’ Hall, which is located at 18 West Smithfield right opposite St Bart’s Hospital where Sir Arthur Conan Doyle once worked as a doctor before becoming a writer, has various meeting and function rooms and is centred on cloistered courtyard around which one can find the odd Henry Moore sculpture.
Though not the original hall, The Worshipful Company of Haberdashers, which dates back to medieval times, throughout six and a half centuries has moved away from its historical involvement in the haberdashery trade and developed into a significant supporter of schools and education in England and Wales.
The event did not pretend that it could solve the Brexit riddle that has paralysed British politics for the past three years, but what it did offer was some insightful discussion and debate on the issues front of mind and likely to impact which way the markets will go this year.
Miller, who spoke to the Sheriff Elect of the City of London, Alderman Professor Michael Mainelli in what could be described as a 'fire-side' chat, commenting fresh from securing a legal victory handed down by the UK's Supreme Court, said in response to a question from the floor on who are “the people” behind Brexit, said: “There are those that believe that Britain has become too liberal.”
Indeed, just the day before the MV event, Sajid Javid, the Chancellor, had said the Conservatives were going to initiate some “bonfire of regulations” and “start afresh”, Miller remarked.
On aspects around money and Brexit impact, she said: “The money is interesting because there are two things that I'm aware of. For example, the 90-day 'Non-Dom' is increasing to 180-days and there is a lot of lobbying to government on that."
She added: "Now there are many people who are very frightened about the Tax Directive that is going to come into effect in January . They are very determined to leave before then because their tax bills are going to go through the roof. Their terrified of that new Directive coming in."
One the biggest worries she expressed was that: "The Prime Minister is not going to play by the rule...the gentlemanly rules of our constitutions and conventions." For instance, she noted that if there was a vote of 'No Confidence': "It's only convention that the Prime Minister goes. He does not actually have to go. And, this idea that it could be that The Queen has to get involved if he refuses to go and sacks her PM, well that has not happened since William IV in 1834 with Lord Melbourne."
She went further saying: "We are in incredibly uncertain times and what worries me the most is that we advisors to the PM who no respect for the law, our civil service and our conventions."
On whether the citizens of the UK should have another referendum on EU membership, Miller, who had been involved in drafting the text for the Shareholder Directive, reflected saying: "That is my other bigger worry. Those pushing for another vote, a Peoples' Vote or a Referendum are looking at themselves and not at looking at our country. And, I worry what they will do to the country is we go through that process."
Risk of Another Financial Crisis?
In his keynote presentation illustrated with a number of charts and graphs, the FT’s Martin Wolf, certainly provided food for thought. He told the audience: “There is a risk of another financial crisis because there is all this debt out there. I tend to think it's a low risk, but it is there. And, there is always the possibility of an 'unknown unknown.’”
He added: “There's a low risk but an incredibly dangerous risk that what we'll actually get is not just a deep recession...but a deep recessionary situation in an inflationary environment. It’s rather unlikely. But there are some things that could happen.”
On that note Mr Wolf suggested that: “We could have underestimated significantly the possibility of wage explosions in the current world, because we’ve had very low unemployment in the most important economies. That might give us stagflation. And, that really will be a nightmare…and then they would have to raise rates. Then what would happen to all that debt.”
The City of London’s Position
Professor Mainelli noted in terms of The City of London, according to the latest Global Financial Centres Index 26 released by research firm Z/Yen last month (Sept 2019), New York had extended its lead over London to 17 points in the ratings.
Strong performances from other centres, in particular Paris, has put London’s second place in the index at risk next time according to the firm, he noted. Further, if London and Paris have similar falls and rises in the ratings for GFCI 27, London would be “reduced to a two point lead over Paris and lie behind Shanghai.”
Brexit, geopolitical unrest and trade wars are introducing “significant adjustments” to medium-term perceptions, the ratings pointed out. Discussion at the launch of these latest findings focused on the position of London and the impact of Brexit, the rise of Asian centres, and the place of technology and innovation in building financial centre competitiveness.
Innovation & Transformation
Perhaps the “greatest transformation” of the London capital markets occurred back in around 1560 led by Sir Thomas Gresham (1519-1579) according to the professor, concluding the day’s proceedings. And, this year the quincentenary of his birth is being celebrated.
He remarked that: “When London was half the size of Antwerp, he brought the idea of an exchange, the Antwerp bourse, to London. London then benefitted from the turmoil that began between Spain and the Low Countries, and the rest of the history we take for granted.” But London has been here before.
“The Royal Exchange at Bank junction is still there and spawned Lloyd’s, the Stock Exchange, and the Baltic Exchange. We cannot take the future for granted. We may be going through another great transformation, technical, political, or perhaps both.”
It’s clear that there are challenges and take note of the sea change that is happening, and he pointed to Sir Thomas Gresham, English merchant and financier who acted on behalf of King Edward IV, managed to achieve for The City.
In 1551 Gresham was instrumental in rescuing and raising the value of the Pound on the Antwerp bourse, which was so successful that after just a few years King Edward VI had discharged almost all of his debts. Then in 1565 he built the Royal Exchange - an exchange modelled on same bourse - without even having to knock down a building in the process.
As to whether attendees felt ‘bull’ or ‘bear’, optimistic or pessimistic, Professor Mainelli noted: “Thomas Gresham would have seen a lot of opportunities to be optimistic, despite the gloom. Tudor businesspeople had to be optimistic.”
In terms where he stood on the optimism front or otherwise, Mainelli concluded saying: “Optimistic of course. Pessimism is for better times.” Carpe diem.
To listen to the full discussion between Gina Miller and Professor Mainelli at the MondoVisione event click this link: http://www.mondovisione.com/media-and-resources/videos/mondo-visione-exc...