Alistair Darling: London will survive UK uncertainty

London will remain the financial centre of Europe despite the post-Brexit challenge from several other locations, according to former Chancellor of the Exchequer, Alistair Darling.

In the wake of June’s referendum, cities including Paris, Frankfurt, Dublin and Luxembourg have been jockeying for position in a bid to usurp London’s status as the continent’s financial capital. But, speaking at the Societe Generale-sponsored annual financial lunch of the French Chamber of Commerce in the UK, Lord Darling suggested that - alongside New York - London is one of only two major world financial centres and that position will remain.

“You can’t be complacent but within Europe, London is the only place that can offer the sheer scale, not just banking but legal services, accounting, insurance and the rest,” he said.

Further, the lead the UK has taken in regulating financial services should help protect London’s status. “[London] has a well developed regulatory regime which can cope with a large number of international banks; a lot of other places can’t,” Lord Darling added.

While conceding that the referendum’s outcome was largely driven by a resentment that began with the 2008 financial crash, the financial services industry was not to blame for the result itself, he argued. The prevailing mood was largely dictated by concerns around immigration and an electorate who “voted against something rather than for it.”

“I wasn’t surprised by the result, but then I don’t live in London anymore,” Lord Darling said, before suggesting that the sentiment behind the vote was also prevalent around the world, and in other parts of Europe, making next year’s elections in Germany and France difficult to predict.

Worse, he added, the electorate’s discontent is only likely to grow if things do not change: “If you don’t face up to the fact that a large proportion of the population feel left out, things won’t get better.”

In terms of a Brexit deal between the UK and EU, Lord Darling argued there was more to be ironed out before talks could even begin. He told the event, “The UK government has not yet decided what it wants, never mind how to sell it to the electorate.”

But, he added, it is imperative that meaningful talks start soon, and it is reasonable to expect those talks will ultimately be productive. “What is needed is a grown-up conversation on both sides. It is not in the EU’s interests to have a stand-off with the fifth biggest economy in the world,” he said.