Pontevedra Pensées: 7.11.16

SPANISH LIFE/CULTURE

Newspaper Reading: As you'd expect, sales and circulation continue to fall, as folk get their updates from the TV and from the internet. I sometimes wonder if I'm the only person in Pontevedra reading the Voz de Galicia, the Faro de Vigo, and the Diario de Pontevedra. Though the (fabricated?) letters suggest otherwise.

Proving Your ID: As you know, there's a mania for this in 'low ethics' Spain. Except, it seems, if you're a teenager under 18 who wants to buy booze in 'some' supermarkets. This has been revealed - as if it were ever a secret - after the death of the 12 year old girl last week who drank an entire bottle of vodka. The only surprise about this is that it wasn't rum, the normal alcoholic element of calimocho. Here in Galicia, at least. Wiki suggests red wine is standard in Spain generally. Even easier to buy, I suspect.

SPANISH POLITICS

Funding Pensions: There's a consensus that this is a key issue which the parties need to get together on. Hopefully to agree a long-term strategy. Here's El País on the subject, in Spanish.

The New Government: Here's El País in English on why things aren't going to change much. Surprise, surprise.

Felipe González: One of the key questions in Spanish Politics right now is What on earth is this ex PSOE president up to behind the scenes. Does anyone know? He seems to have become an exceptionally capitalistic ex-socialist. Like Tony Blair. Except the latter was ever really a socialist. By a long chalk.

THE EU & THE UK

The Banking Centre: Several EU capitals - including Madrid! - are said to be competing to take over from London after a Brexit. Well, maybe. At the end of this post there's an article on probably why not. As the author says: The City has long adapted and reinvented itself, and will do so again. There may be some pain along the way, but that doesn’t mean that it’s all doom and gloom.

ELSEWHERE

The USA: I've long been a great admirer of (North) America and (North) Americans but my admiration has now reached new heights. Any people who can go through what they've suffered in the last 9 months just has to have one's hat taken off to them.

GALICIAN STUFF

Fuel Prices: Funnily enough, it's not just petrol(gas) in this 2nd poorest region which is more expensive than anywhere else but also diesel. One wonders why. But suspects price-rigging. So, interesting to see that a new competitor set up by the owner of Celta Vigo FC has joined the market. But only in Mexico . . . As per the article, the guy is actually dis-investing from his home region of Galicia. Perhaps he doesn't want his gasolineras burnt down.

LOCAL STUFF

Christopher Columbus: Or Cristóbal Colón, as he's rightly known. Our local paper insists that the theory that he came from Poio, Pontevedra is gathering adherents. The magazine Hola! is said to go along with this. AND . . . In a TV series - El Ministerio de Tiempo - they have him talking in Gallego. Or is it Portuguese, given that he lived in Lisbon for a time? The local theory has it that he was Pedro Madrugada (Peter the Early Riser) who retired to a castle in nearby Sotomaior. As I've said, we have a museum dedicated to him here in Poio, right next to "the house where he was born". Well worth a visit. If you like the theory. See Wiki in Spanish on this claim. But not here in English. Double dealing?

FINALLY

My 'Business' Card: The first line on this says Recovering Lawyer. (North) Americans get this immediately and usually fall about laughing. Spaniards just don't get it and all attempts to explain it are not worth essaying. An unbridgeable cultural difference, of course.

THE GALLERY

ARTICLE

Four reasons why banks won't leave the City of London after Brexit:  James Quinn

The sun sets on the City of London's horizon

As the revolving doors on 25 Bank Street swung open, there was an eery silence - apart from the noise from one of the packs of wild dogs who now inhabit Canary Wharf barking in the distance.

The receptionists desks were bare, computer screens ripped from their cradles, phones unplugged, security passes strewn across the counter. On the wall behind the desks, where once the bank’s name was proudly displayed, only two letters remained: 'J P.’

The art work, much of it from the bank’s private collection, had gone too, with the slight fading on the green marble the only sign that there was ever anything hung there.

The only item that appeared to be working as normal was the giant plasma screen to the right of the lobby, with Sky News’ ticker-tape displaying: “JP Morgan leaves London – thousands of jobs gone.”

The description of such an apocalyptic 'Day after tomorrow’ vista might seem ridiculous. But it is the type of vision all but being propagated by some at the highest levels of the banking fraternity who frankly should know better.

There are those  in the City and its environs who are delivering a very dark vision of what the Square Mile could look like after the UK leaves the European Union.

Anthony Browne, head of the British Bankers Association, is one such doom monger, warning over the weekend that banks “hands are hovering over the relocate button.”

The 'shock and awe’ approach some in the banking lobby are taking in the prolonged pre-Article 50 shadow dance over whether the UK remains in the single market is frankly too much. It risks rubbing politicians up in such a way that could lead to a far worse settlement. It also isn’t true that banks will leave the UK over Brexit. Jobs will go, but not banks.

Oliver Wyman’s report for TheCityUK on life beyond Brexit estimated that even under the hardest of departure - with no deal with the EU and the UK operating on WTO terms - some 35,000 jobs would be at risk. But such a high number is unlikely for the following four reasons.

1. Scale

Banks benefit from being close to one another in a number of ways. As a strong body, they have a stronger voice.

That does not always mean they are listened to, or that they get their way, but by joining together en masse, they can at least present arguments as an industry, rather than as independent voices.

Scale also ensures a fluid recruitment market, meaning the best talent is able to rise to the top.

That’s possible because of the skilled workforce that exists in the UK financial services market – from bankers to lawyers to compliance specialists.

Although of course those jobs exist in Paris or in Frankfurt, they don’t in such great a number, and so the creation of an efficient job market is less likely.







2. Cost

Perhaps the most important of all considerations.  Banks have spent the 30 years since the Big Bang – the deregulation of London’s financial markets, whose anniversary is this Thursday – investing in London.

Investment has not just come in bricks and mortar, although there has been a lot of that.

It has come in the people they employ, the city they operate in, and the general infrastructure.

Some banks have spent considerable time and effort lobbying politicians for the best possible environment in which to operate.

Wholesale moves would jeapordise all that, and create an extra set of costs in whichever city or cities the banks in question chose to move to.

And that's before you even get on to the subject of replicating central costs in a number of other cities around Europe.

3. Rule of law

Often cited, rarely ignored. The English legal system is the envy of the world. Only this weekend Donald Trump said that he would like to 'open up’ America’s libel laws to make it easier for public figures, presumably including himself, to sue media companies.

Joking aside, the legal framework, which is the basis for many jurisdictions around the world, offers banks the knowledge that deals signed will be upheld and interpreted in certain ways.

That does not always work in their favour, but at least it is deemed to be fair.

It is not just  the legal framework, however. The regulatory framework, although at times flawed, is also admired.

And the UK offers tax neutrality and has a significant amount of double tax agreements, which international banks can benefit from. 

4. Culture

The UK offers banks and their employees an opportunity to exist in a cultural environment which is welcoming and, just as importantly, where business is conducted in English.

Never underestimate the power of language when it comes to location decisions.

Business culture in the UK is - apart from the 5.30am power breakfasts common on Wall Street - largely the same as in the US, making it a natural fit for the goliaths of the banking world.

Add to that those cultural benefits with a hard 'C’ - from the galleries to the theatres to the operas that banks and financiers fall over themselves to sponsor - which cannot be replicated elsewhere, and London has a lot to offer its financial inhabitants.

So will they stay?

I am far from a Brexiteer - I wrote a pro-EU column for The Telegraph on the day of the referendum- but I honestly believe that the City of London will remain strong post-Brexit.

Will some jobs go? Yes. Will they be replaced by other high-skilled, high paid roles? Almost certainly.

The City has long adapted and reinvented itself, and will do so again. There may be some pain along the way, but that doesn’t mean that it’s all doom and gloom.

Painting pictures of a bleak future for the City simply gives oxygen to those who like to do it harm, and does the industry and all those who work in it a disservice.

The Square Mile remains strong because of the city and country in which it sits, not in spite of it.  It is important to remember that.