Just now the banks are being blamed for everything from global warming to Wayne Rooney’s form. This is part of a successful brand detoxification of the Labour party being carried out by their marketing department, the BBC. And it bears no relationship to reality. It is just a means to distract us from the monumental mess that the last government created. The banks, in fact, are brilliant and we would all be very poor indeed if they weren’t generating great wealth for the country.
The problem is that the vast majority of the population haven’t the faintest idea what the people in the City of London actually do, all they see is the bail outs and the bonuses. The City really could do with employing me to communicate their case to the world.
By accidents of plate tectonics, orbital physics, imperial history and the vision of Margaret Thatcher, London is the financial centre of the world. If the Malaysian government want to build a new railway, if Paraguay want to privatise a public company, if Tata in India want to put a new car production line in, if a Biotech in Israel creates a new drug molecule that they want to market, if the New Zealand government want to convert a few billion dollars into Japanese Yen. Demands like these and thousand more arrive at the door of the city. The numbers involved are astronomical and the benefit for Britain is immense. To give you some idea of the scale, the foreign exchange dealings amount to about 1.4 trillion (that is thousand billion) dollars every day. This is 40% of the entire world total, the other financial centres obviously do far less.
The problem for the UK is that because of the actions of the unions we mostly lost our traditional method of creating wealth, which was manufacturing. Germany didn’t have the same labour problems and kept their manufacturing. And the unions are still at it here with their efforts to destroy a great national wealth creator, British Airways. Against this background it is comforting to know that in 2009-2010 (which wasn’t so good a year for the City) the companies that are there created over 20% of our national Gross Value Added (GVA). To this can be added the economic multiplier. Basically a lot of the money the city earns is spent on other goods, services and taxes, these in turn lead to the money being spent again on goods, services and taxes and so on. The created wealth goes round and round in circles benefiting everyone. So, as you can see without the banks and the rest of the city we would all be a huge amount poorer.
Now you might say that the wealth of the city doesn’t effect you because you are a pensioner, you work for Barnsley council or you run a fish and chip shop in Aberystwyth. Well, without the city where would the money for your pensions come from? How many council workers could Barnsley afford to employ? And who in Aberystwyth would be rich enough to eat out? We would all have to downsize a lot and learn to scrape by, it would be worse than the 1950s because at least then the unions hadn’t got round to destroying our manufacturing.