Phillip Wale: Labour will undo Britain's recovery from the financial crisis

14 April 2015

Since the election campaign began it has become increasingly unclear how the next UK government will be formed.

Bookmakers will give you odds for coalitions, minority governments, pacts and, on the very outside rail, an outright majority. Anyone predicting the outcome at this stage is doing little more than guessing.

For those who operate within the City, this is an unhelpful distraction at a time when economic sentiment is as positive as it has been since the global financial crisis.

It has also become increasingly clear that the Labour front bench seem reluctant to engage with those working in the financial markets, or to temper their rhetoric.

Politically, Labour and the finance community are not natural bedfellows. It would, however, be beneficial if there was the basis of a working relationship should the Labour Party be part of the next UK government.

We are concerned that Labour does not understand that incentives for the business community, so easily attacked in an election campaign, mean that those companies and their employees pay an enormous amount of tax which helps to sustain the public sector’s funding requirements, with the NHS, education, defence and the police at the front of the queue.

It is therefore disappointing, if not entirely surprising to me, that the general election campaign has been used in some quarters to talk down an industry where the UK is a global leader.

I am the first to acknowledge that not all parts of the banking sector serve the public as efficiently as it should and mistakes have been made. However, more nuance and understanding from the opposition front bench would give me more confidence that they represent a credible party to lead the UK to greater economic prosperity.

Broking and banking in the City is a world-class UK export. With a current account deficit of £100 billion per annum it is clear the UK needs more of these.

As Graham Cole noted this week in his commission’s report into the UK’s export performance: “We have to earn our way in a much tougher, more competitive environment.” He’s spot on.

To do this we need politicians that understand that the UK finance industry sits at the very heart of building and growing great UK businesses.

At Panmure Gordon, a corporate finance adviser and stockbroker that has supported businesses to grow for almost 140 years, we are obviously keen that the next government understands our market.

It needs to reinforce, not reverse, what is a bright future for business and specifically SMEs who are either coming to market or require a capital injection.

A well-ordered broking industry ensures that the best firms receive the necessary financial encouragement to crack on. The Coalition’s cuts to corporation tax, welfare-to-work reforms and support for SMEs to contract with the public sector are all hugely welcome.

Any reversal of these policies would be a backward step and would halt much of the employment growth that the UK voter has benefited from during the past five years.

The broking industry also looks to the next UK government to have a mature stance on our international relationships, particularly with the EU.

We support David Cameron’s stance that negotiation with our EU partners over the terms of our enduring membership, followed by a democratic choice for voters is the most appropriate way of providing a single market that works for the UK.

Should politicians choose to stifle debate over the terms of our membership, nothing would push us closer to the exit door in the longer term.

In a world economy that is relentlessly more integrated, ever more international, the City needs UK politicians to be comfortable fostering a business environment that can compete with, not retreat from, international competition. This requires bravery.

Globalisation has brought enormous benefits to UK voters but has also brought highly visible limits to the power of our politicians.

We are a price taker on many markets. This inability to “make our own weather” sits at the very heart of the disillusionment with the current state of politics.

British voters have a choice at this election — to continue the Coalition’s good work in building a competitive economy that embraces international markets and sets up the UK to prosper from them, or we can be seduced by promises that building walls to competitive free markets can undo the effects of international integration.

Pitching the UK against the forces of globalisation would be like collecting pennies in front of a steamroller. It is in the best interests of business and the City that a Conservative-led government should be re-elected to finish the job.

Phillip Wale is chief executive of Panmure Gordon & Co

Phillip Wale: Labour will undo Britain's recovery from the financial crisis

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