The death of UK heavy industry was presided over by Mrs Thatcher in the late 1970s and early 80s. Mining, shipbuilding, mass manufacture of cars and steelmaking were all blue-collar preserves and therefore workers in these industries were largely Labour voters. The 70s was a time of “industrial action” which harmed the economy and led to the fall of the Heath government. The emasculation of the once mighty British industrial base was not simply an act of political barbarism though. The 1970s saw the establishment of the first truly “global” corporations and the scions of capitalism realised that profits could be boosted by moving production from the developed to the developing world where labour costs and ancillary costs were much lower. As a result, the UK moved from being an industrial economy to being service based.
Figures just released show that the financial sector in the UK has contributed a record £71.4 billion in tax to the exchequer last year. This figure represents about 12% of the total tax take and underlines how important the sector is to the UK economy overall. It is estimated that 1.1 million people work within the UK financial sector; 3.4% of the UK workforce. The figures are not broken down to reveal how much of this tax was derived from business transactions within Europe. However, as The City is a major global financial hub and the principal centre for Euro transactions, it is a fair bet that it is a substantial proportion.
Part of the reason underlying the supremacy of London as a financial centre is the possibility for financial institutions from around the world to locate branches within the UK and be able to conduct financial transactions across Europe as if they were EU businesses – a facility known as passporting. With the decision of the UK to leave the EU in the June referendum, the future of passporting is in doubt. Unless the UK retains membership of the Single Market (not just access to it) in some way, the facility will be lost. To retain passporting rights, the UK would almost certainly have to agree to the continued principle of freedom of movement of EU citizens to the UK, something that Theresa May has steadfastly refused to countenance whilst stressing that she wants the best deal with the EU post Brexit.
The government has pledged to provide details of the deal it hopes to strike with the EU to parliament before it triggers article 50 of the Treaty of Lisbon. The current situation is that such a move will require the blessing of parliament via (almost certainly) a Bill – the government is challenging this in the UK Supreme Court right now, arguing that it has the power to trigger the notification under the Royal Prerogative.