Brexit, Business and London

Brexit is the most significant political event in a generation. And by most measures, London is the most exposed to the risks it presents. Compared to the rest of the country it is more reliant on foreign capital, more reliant on EU workers, and more reliant on trading relationships abroad. However, it is also well-positioned to influence the Brexit negotiations, and capitalise on opportunities for global partnership.

Today (Thursday 21st September), Lexington will be welcoming London’s Deputy Mayor for Business to discuss these issues with a panel of business leaders, and explore what the capital needs to remain competitive once the UK leaves the EU. In this Lexcomm, we summarise some of the headline issues.

Scale of the challenge

Like most of the UK’s cities, London voted in favour of remaining in the EU. Its political leaders and businesses have been loud voices in favour of ‘soft Brexit’, citing the challenges facing the capital and a strong desire to stay inside the single market. In some cases, this has reached as far as discussing the potential for a second referendum, which Mayor of London Sadiq Khan mentioned during the summer.

This puts London firmly at odds with swathes of the UK public and politicians. It has also given Khan the platform to become one of the most prominent figures in the debate about the UK’s future relationship with the EU. In this, two prominent themes have come to characterise the issues London faces: first, its need to retain trading links with European partners (and to help strike new deals beyond Europe); second, the ability to retain and attract the talent its businesses require, both to fuel investment and provide the services that Londoners need.

But in presenting their case, politicians and businesses also need to consider a broader question about London’s role in the UK. Will Brexit emphasise the political, economic and social differences between the city and the rest of the UK, or can it be used to bring us closer together?

Fixing the roof

Although Brexit is now part of every business conversation, London still faces a number of other issues which cannot be ignored.

If the city is to remain competitive it will need continued investment in infrastructure, especially in light of increased calls to rebalance public spending away from the south (Crossrail 2 was a prominent point of discussion at London First’s recent Infrastructure Summit). It will also need to address the housing crisis, Sadiq Khan’s top political priority, and ensure that it has the skills and talent in its workforce to drive the economic engine.

This means much more than attracting foreign workers and willing investment. It requires business to put its shoulder to the wheel to deliver jobs and training opportunities in partnership with the education sector. However, at times of uncertainty the government and Mayor of London will have to work with the private sector to attract investment.

Grasping the opportunity

Despite these significant issues, London remains one of the best places to live, work and play. And although businesses face uncertainties ahead, the city remains well-positioned. First, London’s businesses own important relationships with the growing economies beyond Europe, such as the Far East, and can act as the beachhead for the UK’s efforts to develop new trading relationships. Second, the capital has a critical role to play as part of the global network of world-cities which share a mutual interest in securing a Brexit deal which allows business and trade to continue flowing.

London is undoubtedly more exposed than some of its peers to the risks Brexit presents. However, the UK government is actively seeking input from the business community and the Mayor of London will continue to support the city’s investors and employers. Allied to the capital’s role on the global stage, this means London can help shape the UK’s future relationship with the EU.