The European Union wants to impose a cap on banker’s bonuses. Regardless of what you think about the reasonableness of legislators trying to regulate private sector salaries – I’d say it’s a daft idea, no matter how much banks need to change the bonus culture – it is another sign of the shifting sands for the financial services industry.
The sector is slowly, inexorably, shifting its centre of gravity eastwards. London is never going to disappear as a global finance hub, but it’s inevitable that the City’s influence will decline over the next 10, 20 maybe even 30 years.
That’s going to have a huge impact on the UK economy, and no matter how much successive governments will try to protect the finance sector, it is difficult to see anything but a gradual reduction in its contribution to GDP. Thanks to technology, banks can put their physical headquarters wherever the regulatory and tax environment is most favourable.
So this government, and the next, and the one after that, will all face a difficult decision. The sector that was the powerhouse of the UK economy for the 25 years since Maggie Thatcher’s “Big Bang” deregulation, will need to be supplanted by something new.
Now I know I’m biased, but surely if any sensible person takes a long-term view of what industry is likely to generate the biggest growth over the next 20 years, you can’t look much further than technology.
What’s more, the UK is well placed – a great (but still under-developed) skills base, a culture of innovation and creativity, a history of invention, and the most digitally active population in Europe.
The government plans to publish an “information economy” strategy in May – a rather belated stab at what it describes as “Digital technologies and information combining to drive productivity and create new growth opportunities across the whole economy.”
Glad they noticed.
But more than ever, it is clear the UK needs a committed, long-term strategy to place technology at the heart of our economy; one that transcends party politics and promises to put the country at the centre of what will be the most important sector in world business.
The industrial revolution was the turning point for the UK’s global economic influence. Let’s not waste the opportunity for the digital revolution to have the same impact.