52% of Britons don’t like the European Union, but (and there are no statistics to validate this) it seems that a far higher proportion of the population dislike “banks” and the “bankers” who work in them. Yes, senior bank executives like Jamie Dimon might love London, but Dimon’s warm tinglyness is not widely reciprocated by the population across the rest of the UK.
When the Brexit storm abates, it’s this anti-banker sentiment that has the potential to be the City of London’s undoing. In the wake of the 2008 financial crisis, Britons of almost every hue have grown used to blaming banks for the country’s ills – and in particular for the unpopular (and ongoing) austerity policies of the Conservative government. This isn’t entirely unreasonable: British government debt as a percentage of GDP rose by 6,050 basis points between 2007 and 2015 in the wake of the banking bailout, according to the OECD, compared to increases of 4,860 basis points in the U.S., 4.690 in Italy and 1,000 in Germany.
Rightly or wrongly, the narrative among the British public is that things were all going fine – that they lived in a modern liberal democracy where the state could afford to bail them out – until the financial crisis. Now, the state has no money and the banks and bankers were bailed out instead.
If everyday life for the average highly indebted Briton worsen after Brexit takes place, this narrative will evolve. Maybe Brexiteers will take the stick instead of banks? Maybe banks will be disliked more intensely than ever? More likely is a mix of the two.
Either way, there is rich fodder in the UK for politicians who want to heavily tax banks and the people who work in them. The British Bankers Association calculated last year that an extra £40bn will be raised between 2010 and 2020 from assorted new bank-specific taxes. Now, Jeremy Corbyn, leader of the UK Labour Party, says he wants to introduce, “some kind of high earnings cap,” to assuage inequalities. Corbyn didn’t mention banks, but his comments have been interpreted as applying specifically to bankers nonetheless.
Corbyn’s statement could be deemed irrelevant: the Labour party is trailing in the polls and a cap on salaries could be mitigated by payments in stock. However, the events of 2016 suggest anything can happen, and the previous Labour governments’ bonus tax proved adept at closing most loopholes.
Meanwhile, bank CEOs are still warning British lawmakers about the effects of an abrupt Brexit with no transition period. Why stay in a country riven with uncertainty and eager to exploit historic public opprobrium towards you when there are easier circumstances to be had elsewhere?