UK: Farewell

 

I confess that I love London—it is a remarkable city.  London is full of great history, but it also feels like a city with a great future.  How could I not love one of the key global financial centers?  The food does not rival Paris, and London is far too expensive, but a great city nonetheless!

Over the past few days, I rode the Tube to meetings all over the city.  As the train comes into each station, a pleasant voice reminds us to “mind the gap.”  This was one of my key takeaways from being in London.  In order to understand the U.K. economy and financial markets, we need to “mind the gap” between the U.K. and Europe.

On one hand, the British are fiercely independent.  They value the independence of the Bank of England.  They literarily treasure having the Pound rather than the Euro.  There is momentum behind a referendum to leave the European Union entirely.  A degree of independence has clearly benefited the U.K. economy and financial markets in recent years.

On the other hand, the U.K. clearly has a degree of dependency on Europe.  It is part of the European Union.  Its role as a global financial center depends on an ability to integrate financially with the continent.  It will not stray far from the fortunes of the EU and the Euro.

The ability to successfully “mind the gap” will determine the success of the U.K. economy and financial markets.