The View from the City

In parallel with this, bankers and financiers sprung up in the City of London to finance this trade. Besides the British there were Germans from the Hanseatic League, Lombards from Italy, Huguenots from France, traders from the Orient, and from the eighteenth century onwards, Americans from the United States. Thus the reputation and strength of the City of London grew. In 1911 Francis Hurst, the then editor of the Economist wrote: “The City is the greatest shop, the greatest store, the freest market for commodities, gold and securities, the greatest disposer of capital, the greatest dispenser of credit. It is the world’s clearing house.”

As an international trading and financial center, the City, along with the United Kingdom, recognizes that international trade in goods and services is the great engine of global economic growth. Indeed it has grown seventeen-fold over the last fifty years. At the same time production has quadrupled and per capita income has doubled. Within this trade, the service sector contributes more to world-wide economic growth and job creation than any other. It is the key to the future of the world economy. The European Union, as the largest single market in the world, is a world leader in this area. And within Europe, the City of London is Europe’s financial capital.

The City consequently strongly supports the European Commission and the World Trade Organization in their efforts to liberalize trade in services, particularly financial services. These are of overwhelming importance in the development of the countries of Eastern Europe, Latin America, Africa, and Asia-Pacific. For trade in a wide range of financial instruments, be they insurance, banking or securities, combined with the presence of foreign financial institutions, helps promote stable capital flows, which in turn increase financial stability. Transparency, good regulation, and adequate supervision also strongly contribute towards more open and efficient economies.

Businesses and institutions in the City of London are only too aware that populations in many countries are wary of international trade. They have been encouraged by the tactics and rhetoric of some leading, and influential, NGOs that are campaigning against globalization; against the international institutions, and the WTO in particular. Ladies and Gentlemen, we cannot ignore them; indeed we cannot afford to ignore them. The scenes in Seattle and in Davos show quite clearly that we have to take the debate to them—just as our predecessors had to explain the vital importance of world trade in the 1950s after the years of protection of the 1930s and the war years of the 1940s—and we have to win it.

Of course we look to our governments and to international organizations to articulate these arguments. But business itself is not immune from this responsibility. Business too must make its case and demonstrate to the developing countries that it will be to their advantage, and to the advantage of their populations, to liberalize. They need to show clearly that the solutions advocated by protesting NGOs will harm growth and harm employment everywhere. Business should agree with governments on common aims and priorities and it needs to work alongside governments in achieving the benefits of liberalization for all.

The businesses of the City of London thrive on openness and competition. We all wish to see greater liberalization, both within Europe and across the world. And we particularly need greater freedom for firms to trade across borders.