Dark days in Canary Wharf: Are the lights going out on the City for good?

This has been a summer like no other in the City – certainly not in recent memory.

Quiet at the best of times, this year’s season has been marked by complete torpor. There’s simply been not much going on, not enough to detain the thousands who work there.

Of course, it’s the holidays. At times, it’s been uncommonly hot, which does not help. But this feels different.

Offices lie dormant. Some of their occupants are away, for sure. Others, though, are WFH, which is a blight across the Square Mile and Canary Wharf, affecting not only the productivity of the financial firms but also the myriad small businesses that service them.

The inactivity goes deeper, however. There are no deals to speak of, takeovers are not even being discussed, let alone happening. Stock market flotations are occurring, but they’re taking place elsewhere, primarily in New York.

In the EU, cities like Paris, Frankfurt, Amsterdam and Berlin are buzzing, displaying an energy that London once possessed and appeared to have as its own. Not anymore, not post-Brexit.

The City sold itself to the world on its history and reputation (“my word is my bond”) and expertise in banking, law, accountancy, insurance, and public relations. There was also another factor, too. It was the gateway to Europe.

Alongside the City’s attractions were English, the universal language of business, and all that London and the UK offered. Good schools, shopping, arts and culture, a liberal society, restaurants, legal system – the list of given reasons for why businesses chose to come here was long.

With that hegemony came financial benefits. Financial services, in London and outposts like Leeds, Manchester, Bristol, Edinburgh, was the engine of the economy. While other sectors wilted, the City could be relied upon by successive governments to keep on growing and delivering.

It generates £75.5bn a year in tax revenues, which equates to more than 10 per cent of the total tax take. More broadly, the City in its widest sense, is a major contributor to our national wellbeing. Without it performing, the UK would be lost.

That, though, is the crisis that is looming and is increasingly evident on the streets of the City and Canary Wharf. In no time at all, we’ve gone from world number one – ahead of New York – to fading. We’re still up there, but New York is now the undisputed leader.

We’re still second but all that is keeping us there is the fact that within the EU there is no clear dominant player. A City lawyer said to me this week that he was seeing more and more business centring on Frankfurt, Paris, Amsterdam – he was now having to pay them regular visits when in the past they came to him. On their own, they each trailed London by a considerable margin. But put them together and they were challenging fast.

The City basked in its role of playing host to the world. We did it well. We even had a phrase for it, the “Wimbledon effect”. We put on the best tennis competition without producing winners ourselves. It did not matter; our status was assured. That’s where the City stood, and the rest of the country reaped the rewards.

Brexit altered that dynamic. Pro-Leavers will insist that contrary to Remainer predictions, the flood of jobs to the EU has not transpired. There’s been a trickle, but generally numbers have held up.

Yes, but that ignores the reality, which is while banks and others have maintained their workforces in London, they’ve been adding posts elsewhere. Goldman Sachs and JP Morgan are just two that have doubled their EU head counts. Paris is now Goldman’s EU trading hub; once, it was London.

The stock market is a shadow of its former self. Companies have deserted it for the US. Flutter, Arm Holdings and CRH are three recent defections of businesses that London can ill afford to lose.

The FTSE 100 is slipping into irrelevance. Trading volumes are sluggish, UK equities don’t excite, institutional and retail investors are putting their money elsewhere.

It’s not only New York. The EU and its central bank are pushing constantly for more business, demanding more capital is held on the continent, seeking larger shares of derivatives trading.

They are actively chasing business. The UK government meanwhile gives the impression of being frozen in the headlights.

They’ve made some changes, relaxed banking rules here and there via the so-called Edinburgh reforms, but these will not be enough to solve what is a growing problem.

They’re doing enough to crack down on WFH, starting with their own civil servants. Britain has got WFH far worse than its peers, yet precious little is being done about it.

The idea that Canary Wharf – once the jewel of the post-Big Bang deregulation era, symbolising the financial might of London and the UK – could be allowed to wilt is shocking.

Critically, it’s not just Rishi Sunak and his colleagues. No one is speaking up for the City, for big business, not loudly enough anyway. The CBI is in trauma, there is no organisation of substance, one that resonates nationally and internationally, highlighting the increasing despond and demanding action.

The City’s case is not made easier by the fact that we’re managed by politicians focused on levelling up (there must be levelling down and that is where London and the South East come in) and as a nation we’re quick to condemn fat cats and high earners.

Something must change, or else a once bright star will cease to shine. And we will all be worse off for it.