I do occasionally skim through the financial pages of various newspapers and tend to alight on the more academic economic articles written by economists. I am not an economist by training but as part of my background in studying history I also studied economic history. Sometimes I feel that this is an aspect of economics which economists often ignore - have we been here before? Clearly anyone with a knowledge of the South Sea Bubble speculative disaster in the 18th century or the Great Depression could have foretold that predictions of permanent growth and economic sunshine were fatuous. Which reminds me. Now that the Labour Party conference is heralding Gordon Brown as the man who saved the UK from the great depression Mark 2 etc, is this not the same Gordon Brown who only a couple of years ago predicted "an end to boom and bust"? Ah yes but memory is a strang thing and most politicians hope that the electorate have forgotten their errors by the time of the next election.
Which brings me back to the news which I read last Friday that the Head of HSBC Bank was moving to Hong Kong. This news was related to thousands of HSBC staff in the City of London but they were assured that this would have no impact on the operations of the bank in the UK or the importance of the City. Of course HSBC was originally based in the British colony of Hong Kong and relocated to London after the colony was returned to China. The news has created jitters in the City and I think it should do so. This is an indication that China's and Asia's economies are where the future is and that the City of London (on which the sun never sets) is beginning to wane. The whole basis on which the Thatcher government of the 80s built their so called economic strategy was that the City and the service sector would constitute UK Plc, whereas manufacturing industry, with all its attendant apprenticeships, exports etc, could go to the wall. The City would be the head of the British economy, the rest the body. The problem is that during the 80s and 90s, and into the new century, it became a bloated head, leaving very little as a body.
I predict that HSBC is the harbinger of change and that as the economic centre shifts east many other banks and financial institutions will do likewise. They will use the threat of this to blackmail the UK government over bonuses etc, as they will realise that without them the UK economy is a very shrunken creature indeed. So they will demand more and more - these wealth creators and titans of finance. The international rating of the UK will continue to fall and this will accelerate. To put it bluntly, the UK is producing and exporting next to nothing in comparison with other EU countries and the voodoo economics of Thatcher and her New Labour and Conservative successors still dominates. Like the Bourbons, the government has learned nothing from history and from this recent unregulated financial disaster. Staff responses at HSBC ranged from those who claimed that some people might think that London was no longer the global headquarters but that there would be no day to day difference, to those who believed that it was a symbolic move and was bad for London in the long term. Banks will follow capital and the City of London is heading into a long term decline.
It is best that the UK economy adjusts as quickly as possible to the new situation in the world and the pressing twin issues of job creation and climate change. The old Thatcherite model of the City as be all and end all is ending and there must be a clear economic strategy of new green industries and new green jobs. The manufacture and production of things must be placed back at the heart of a new economic model and the casino capitalism of the City abandoned as a last century mistake. To fail to adjust to the movement of the global economy eastward and to be caught napping will ensure that Britain's only source of revenue in the future will be tourism and television comedies. There is a crying need for planning and for putting Britain back to work as part of a real green economy and not as part of an inflated Potemkin village, which is what the City of London really is. The Green Party is looking forward and preparing for this new economy whereas the other parties are still floating up and down in the wake of the last banker's yacht sailing east down the Thames.
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