How Brexit damaged the City: the truth at last

Average salaries in the City of London for jobs in banking, insurance, the law and quite a few others are between £70,000 and £80,000. That is just the average, and includes many people just starting out. The top jobs pay more, far more.

So, when the Lord Mayor of London Michael Mainelli, who represents the Square Mile to the world, tells you that Brexit has cost 40,000 jobs in the City, you should pay attention.

The cost of those lost jobs is huge. If you earn £80,000 you pay almost £24,000 in tax and National Insurance. Your employer also pays more National Insurance. The hit to the Chancellor of losing these 40,000 jobs is huge, well over £1 billion a year, every year. That total doesn’t cover the taxes on the profits those jobs would have created or the other jobs that would have been supported by those high earners’ spending.

Rachel Reeves is desperately trying to find billions to close the black hole in the government’s finances. In the City alone Brexit has cost her well over £1 billion a year in lost revenue and the City is just one part of the British economy, and probably not the worst effected by Brexit. The total lost potential taxation is more like £40 billion for the whole economy every year. That’s more than the Chancellor needs in order to fill that black hole.

The City is still prospering, its exports are rising and it is one of the most important and dynamic sectors of the UK economy. But Brexit injured the City, and everybody knows it.

We are now on the outside of the EU looking in and the EU is keen to attract more of the business that is done in the City. There is not much we can do about it. When we were in the EU things were different and we managed to block attempts to take business away from the Square Mile. Now we can’t.

The previous government dealt with this problem by refusing to listen to anyone who complained about Brexit. Businesses and their lobby groups all learnt to keep their heads down and to shut up about their problems.

But now they know they have a government that at least wants to reset our relationship with the EU – there’s no longer any need to keep your head below the parapet for fear of government displeasure. You can expect more complaints from farmers, from the distribution industry, from manufacturing, the City and all the rest.

Will it make a difference? Well, it stands a better chance of working under a Labour government, but not much better. Short of re-opening a complete re-negotiation with Brussels, which isn’t going to happen, we are just going to have to muddle along, accept the damage and resign ourselves to the chancellor having to find the lost billions from somewhere else.