Banking and the Wider Economy

The UK is currently in the midst of banking bonus season, there are legitimate concerns regarding the size of bankers bonuses, wider society is hurting in this time of austerity while the banking sector is seen to be doing business as usual. There seems to be a real disconnect between the financial services and the rest of the economy.

While the Government needs to reflect public sentiment and explore ways of tackling overly large bonuses and ensuring that they are linked to success and never reward failure, it must always act in ways that preserves London’s pre-eminence as the world’s leading financial sector. This leaves the lion’s share of responsibility to tackle bonus and repairing the relationship with the wider economy in the hands of the banks themselves and they need to take this seriously.

Much has been said of the importance of the City of London to the UK economy but little about the City’s responsibility to the rest of the world. London is the developing world’s finical centre of choice to raise finance, there are more African companies listed in London than anywhere else in the world except Johannesburg. 40 of the FTSE 100 have at least 25% of their revenues from emerging markets (predominantly Commonwealth countries) many have substantially more.

If the damage to the City’s reputation is not tackled and London loses its status as a world leading financial centre them impact will go far beyond just the UK economy.