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Inside the UK’s Post-Brexit Economy: Why Investors Should Have an Eye on London

London is firmly open for business, and that is a message emanating from the gleaming towers of the city, the corridors of government and the flashing screens of the stock exchange.

wo years ago, the British press was full of news about leaving the European Union (which the UK did formally on January 31, 2020). It was a theme which had dominated the media for years, and there seemed little sign of it changing. Then, news began to emerge of a strange new respiratory virus in a Chinese city called Wuhan…

Now, the worst excesses of COVID-19 seem to be abating, and parts of the world are starting to shake off the strictures of lockdown. We have found, perhaps to our surprise, that life goes on. It is very far from business as usual—adaptation is one of the key skills of the new economic landscape—nevertheless, the world keeps turning, and we must turn with it.

So, what is it like in the UK? What are the opportunities for entrepreneurs, investors and business leaders? How has the landscape changed? Is the UK economy different than it was before?

At the moment, London is a thriving center for the tech industry, home to more than 60 unicorns, according to the annual report of growth platform Tech Nation. Some are growing at an extraordinary rate: DivideBuy, a lending platform, reported average growth of 20,733 percent over a three-year period, while Popsa, a photobook specialist, went up 10,576 percent. And IPOs are on the rise, too; technology and consumer internet listings accounted for more than half of total capital raised in the first six months of 2021.

This development should be prominently on the radar of investors and others. London has traditionally lagged behind the U.S. for tech floatations, but the momentum is firmly on the eastern side of the Atlantic right now. One reason is that tech is becoming understood in a broader context; it is no longer just software and social media, but the heart which drives platforms in all sectors—and that is where London gains an advantage.

The capital has strength in depth in areas like energy, telecommunications and financial services, and that infrastructure increasingly gives it the edge over not just Amsterdam or Frankfurt but even New York. Observers from the U.S. should also be aware of the emerging regulatory environment. The UK government sponsored a review of how companies raise money on the capital markets, led by former cabinet minister and EU commissioner Lord Jonathan Hill of Oareford.

Its recommendations were published with a distinctly deregulatory flavor and have been warmly welcomed by the UK Treasury. Chancellor Rishi Sunak remarked: “Our vision is for a more open, greener and more technologically advanced financial services sector.” That vision is being delivered on a number of fronts. The prospectus regime for companies seeking finance will be reviewed and made “less burdensome” (code for less exhaustive and rigorous).

The government also intends to relax the rules on dual-class shares, allowing differentiated voting rights but only for up to five years and with a maximum voting ratio limited to 20:1. The free float requirements will also be reduced from 25 percent to 15 percent.

All of this is a strong sign of intent. The political establishment has argued bitterly over a vision for the UK after Brexit, but a constant theme has been the creation of a free-market, light-touch-regulation, agile trading hub modelled in part on Singapore and the ghost of colonial Hong Kong. The current conservative administration, pandemic notwithstanding, has a buccaneering wind in its sails, and the effects on investment are clear.

However, there is something more, something besides share prices and rules and floatations. There is, unquestionably, a new mood in the City of London. Like any financial hub, it still bears the scars and the bloodied hands of the financial crisis. But financial services are growing in confidence, beginning to point to the contribution they make to the wider economy and realizing that they have somehow survived the worst of the pandemic.

This new mood combines relief—life, as I noted earlier, goes on—and eager openness. The UK has much to prove in the wake of Brexit, as witnessed by the hyperactivity of international trade secretary Elizabeth Truss, forging deals around the world. Early predictions of the collapse of UK financial services have been proved wrong.

Fund managers are looking at new regulation changes; the overall European market is fracturing among Amsterdam, Frankfurt, Dublin, Luxembourg and Paris; and current estimates are that only 7,400 jobs have been relocated from London to other European centers.

London is firmly open for business, and that is a message emanating from the gleaming towers of the city, the corridors of government and the flashing screens of the stock exchange. There is a sense that anything is possible. Anyone who works in business or finance should prick up their ears, and maybe look at upcoming flights to London.

By: Eliot Wilson

Eliot Wilson is the cofounder of Pivot Point, a change management, strategy and PR consultancy based in London.

Source: Inside the UK’s Post-Brexit Economy: Why Investors Should Have an Eye on London – Worth

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U.K. Hit By Worst Economic Contraction On Record Amid Covid-19 Pandemic

Britain’s economy shrank by a record-breaking 9.9% in 2020, new figures by the Office of National Statistics show, highlighting the impact of Covid-19 restrictions, employment uncertainty and reduced demand, with limited growth in the final quarter narrowly avoiding a double-dip recession.

The Office for National Statistics said Friday that the U.K.’s economic output fell by 9.9% in 2020, the largest annual fall on record.

Though the economy grew 1% in the last quarter when looser restrictions boosted the services industry, overall output was down 7.8% from the last quarter of 2019, the ONS said.

The slump is twice that of the 2009 financial crisis and is possibly the worst in 300 years, with models from the Bank of England suggesting a decline of 13% during the Great Frost of 1709.

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U.K. finance minister Rishi Sunak said the figures show that the U.K. has suffered a “serious shock” as a result of the Covid-19 pandemic.

“While there are some positive signs of the economy’s resilience over the winter, we know that the current lockdown continues to have a significant impact on many people and businesses,” Sunak said, adding that his focus “remains fixed on doing everything we can to protect jobs, businesses and livelihoods.”

Key Background

The pandemic and associated public health restrictions made for an economically bumpy 2020, especially in economies like the U.K. which are heavily reliant on services. In the U.K., the first and second quarters of 2020 shrunk the economy by 2.9% and 19% respectively, but there was record growth of 16.1% in the third as restrictions were lifted.

Tangent

In contrast, the U.S. economy shrank by a record 3.5% in 2020, the worst year since the aftermath of World War 2.

What To Watch For

Strict public health measures and a resurgent wave of Covid-19 infections driven by a dangerous new variant of the virus have the U.K. economy likely falling again in 2021. While the U.K. has the worst coronavirus death rate in the world, it also has one of the best vaccination records, priming the country for an economic comeback. The BBC reported Bank of England Chief Economist Andy Haldane describing the economy as a “coiled spring” ready to release large amounts of “pent-up financial energy”.

I am a London-based reporter for Forbes covering breaking news. Previously, I have worked as a reporter for a specialist legal publication covering big data and as a freelance journalist and policy analyst covering science, tech and health. I have a master’s degree in Biological Natural Sciences and a master’s degree in the History and Philosophy of Science from the University of Cambridge. Follow me on Twitter @theroberthart or email me at rhart@forbes.com

BBC News

The “economic emergency” caused by Covid-19 has only just begun, according to the UK’s Chancellor Rishi Sunak, as he warned the pandemic would deal lasting damage to growth and jobs. Please subscribe HERE http://bit.ly/1rbfUog Official forecasts now predict the biggest economic decline in 300 years. The UK economy is expected to shrink by 11.3% this year and not return to its pre-crisis size until the end of 2022. Government borrowing will rise to its highest outside of wartime to deal with the economic impact.

The government’s independent forecaster, the Office for Budget Responsibility (OBR) expects the number of unemployed people to surge to 2.6 million by the middle of next year. It means the unemployment rate will hit 7.5%, its highest level since the financial crisis in 2009. Newsnight’s Political Editor Nick Watt and Policy Editor Lewis Goodall report. #BBCNews #Newsnight #Coronavirus Newsnight is the BBC’s flagship news and current affairs TV programme – with analysis, debate, exclusives, and robust interviews. Website: https://www.bbc.co.uk/newsnight Twitter: https://twitter.com/BBCNewsnight Facebook: https://www.facebook.com/bbcnewsnight

U.K. Economy Plunges 20.4% As Global Stocks Waver Over Fears Of Second Wave

Latest statistics from the U.K.’s Office of National Statistics show the true cost of a full month of lockdown measures which led to the closure of all non-essential businesses.

KEY FACTS

“April’s fall in GDP is the biggest the U.K. has ever seen, more than three times larger than last month and almost ten times larger than the steepest pre-Covid-19 fall. In April the economy was around 25% smaller than in February,” said Jonathan Athow, Deputy National Statistician for Economic Statistics.

The statistics were worse than expected than economists surveyed by Reuters who predicted a 18.4% drop.

The OECD had warned that the U.K. was the developed economy likely to suffer the worst economic impact from the pandemic with the Paris-based think tank forecasting a 11.5% drop in GDP over 2020.

Italy, which was the first country in Europe to be impacted by the pandemic, was expected to see a 11.3% drop in national income, while the United States would see a 7.3% fall over the year.

The slump in national income during the pandemic outpaced even France, Spain and Italy, which had imposed far stricter lockdown measures. U.K. for the first quarter of 2020 plunged 10.4%, ahead of France’s 5.8% drop and Italy’s 4.7% retraction.

European stocks fell on the news of the bleak economic data from U.K., and the worst day on Wall Street since March with the S&P 500 closing 5.9% lower on Thursday. London’s FTSE 100 was down 1.15%, the Europe-wide STOXX Europe 600 index fell 4.10% while Japan’s Topix index closed down 1.15%.

Key Background

Today’s economic data will make bleak reading for Prime Minister Boris Johnson who is facing mounting criticism for his handling of the pandemic even from inside his own government. The U.K. has now logged 41,128 deaths from the coronavirus, the highest toll in Europe and second in the world behind the U.S., while facing an immense economic hangover from placing its economy on life support. Economic data for June is likely to show growth springing back as stores are allowed to reopen on June 15, but a key question will be how many job losses will be made permanent, and how more money will the British government and the Bank of England need to pump into lifelines to businesses and workers.

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Iain Martin

I joined Forbes as the European News Editor and will be working with the London newsroom to define our coverage of emerging businesses and leaders across the UK and Europe. Prior to joining Forbes, I worked for the news agency Storyful as its Asia Editor working from its Hong Kong bureau, and as a Senior Editor in London, where I reported on breaking news stories from around the world, with a special focus on how misinformation and disinformation spreads on social media platforms. I started my career in London as a financial journalist with Citywire and my work has appeared in the BBC, Sunday Times, and many more UK publications. Email me story ideas, or tips, to iain.martin@forbes.com, or Twitter @_iainmartin.

CNBC International TV

U.K. GDP shrank by 2.0% in Q1, largely because of the coronavirus pandemic. George Buckley of Nomura says there is more bad data to come – but the economy could bounce back next year.

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Inside the UK’s Post-Brexit Economy: Why Investors Should Have an Eye on London

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U.K. Hit By Worst Economic Contraction On Record Amid Covid-19 Pandemic

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U.K. Economy Plunges 20.4% As Global Stocks Waver Over Fears Of Second Wave

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