Good for rich investors and big business, less so for everyone else.
Good for rich investors and big business, less so for everyone else
Last week, the Mayor of London published his report on the impact of an EU exit on London’s economy. His chief economics advisor, the city insider Dr Gerard Lyons, wrote it for him with the help of GLA staff. Here are five things I took away from it.
Overview: it’s exactly what you’d expect
Despite taking over a year to produce, the report makes familiar arguments with surprisingly little evidence.
On the economy, Dr Lyons and the Mayor want less regulation. There is no consideration of how regulations can drive innovation and create new markets, for example for low energy appliances or cleaner vehicles.
They also assert that the European social model is broken, that our workers’ rights make us uncompetitive, and that our expenditure on social security should be significantly cut.
Elsewhere, they are very pro-immigration but only if it is managed, so we can allow immigrants who help businesses but not otherwise. They don’t want open borders with new accession countries that are much poorer. But they don’t consider whether poorer countries might also benefit from trade barriers to protect and develop industries. It’s a one-sided argument.
And of course they want freedom from the European Courts of Justice and Human Rights because they say the courts appear “to only generate negative sentiment in the UK”.
He dislikes regulations, but can’t name many
Boris has repeatedly said he wants scrap the Working Time Directive, the Financial Transaction Tax and the Bankers’ Bonus Cap, so it’s no surprise that they are in this report.
But Dr Lyons admits that when he asked the business people who complained about regulations, they were unable to cite any specific regulations that should be abolished. They just assert, without evidence, that there is a problem.
In fact, he is in a muddle about regulations
In his speech launching the report, Boris referred to European safety regulations for people driving vehicles over 3.5 tonnes as “over-prescriptive”, suggesting they made it more difficult for new companies to break into the market.
But through TfL he has lobbied for and introduced much tougher and more complicated rules for lorry drivers and operators on training and equipment, and he has been lobbying for more EU rules on safer lorry design. These were introduced for the same reason as the EU regulations – to improve road safety.
He is obsessed with the City
Despite employing fewer people than sectors like business services, ICT, retail, public administration and health, Dr Lyons and Boris still describe the financial services as London’s most important industry.
Uniquely, they want the City to have a veto over any EU initiatives that might have a disproportionate impact on it. The report doesn’t consider why the rest of Europe, even the rest of London, might justifiably make the City second fiddle to the stability and equality of the rest of our economy and society.
He only cares for big business
When considering how the Mayor could plan ahead for a possible exit from the EU, the report suggests the Mayor should talk to the key stakeholders “to address immediate concerns and issues”. Who does it suggest? Big investors, big employers and business organisations.
There is no mention here of small business groups, trade unions and civil society groups, nor experts on the large amount of social and environmental legislation that might change.
There is only one paragraph in 94 pages discussing environmental directives and regulations, which fails to even mention their economic importance.
In fact, the whole report only really looks at the economy in terms of growing output (GVA) for the benefit of big business, and occasionally employment. There is no consideration of poverty, nor of inequalities in wealth, income, gender and ethnicity. He doesn’t look at the impact on the development of strategically important industries, because his neo-classical approach to economics simply can’t countenance this.
There is also no mention of making London more resilient to climate change, despite our Economy Committee hearing that this is the biggest long-term threat to business in London.
The report says London is in a win-win situation, gaining whether the UK stays in the EU or leaves it. But it only really shows that it will be a win-win for rich investors and big business.
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