A hitchhiker’s guide to the City

This is my valediction after 25 years at the FT. I started working in the Square Mile almost a decade earlier. During my career, The Hitchhiker’s Guide to the Galaxy has proved more useful than any business handbook. The City, like the Vogon Constructor Fleet, has wreaked regular destruction in its attempt to create a better universe or simply a hyperspace bypass. Gearing rather than bad poetry is usually to blame. I have tried not to panic.

I joined the investment bank Barclays de Zoete Wedd as a wannabe brewery analyst a few short months after the Big Bang and just before the Great Crash of 1987. I learned to play spoof long before Mike Ashley of Sports Direct. 

The FT took me on as a rookie reporter the year that Barings collapsed. Derivatives were at the root of the problems, according to the Bank of England.

Gearing of a more conventional sort featured in the split capital investment trust scandal of the early 2000s, which came hot on the heels of the dotcom boom and bust. I reported on the implosion of a “magic circle” of investment trusts connected by debt, tight crossholdings and illiquid assets.

Within a decade, Iceland’s banking whizz-kids were stirring up the same pudding of debt and crossholdings to pump up equity values and their returns. It became a death spiral in 2008 when markets turned. I pulled at the same strands again and again: during the financial crisis and when chronicling London’s junior market from 2012 onwards. 

Some things never change. The architects of doomed financial schemes will always remain deaf to warnings until the inevitable collapse leaves them blaming the messenger.

Other aspects of City culture may be slowly on the move. When I started work, some pubs still barred women customers. After I critiqued the corporate governance pile-up that was Aim-listed Rangers Football Club, a reader advised me to “stick to writing about hair and nails”. I bet Martin Wolf does not have to put up with that. Nor, I hope, will the new generation of women columnists.

Another less welcome development comes in the form of external threats to the City, which as we have seen is perfectly capable of managing its own destruction. A far more implacable Vogon Constructor Fleet is massing as a result of Brexit

Its cue is the innocuous-sounding footnote 21 in a July policy paper where Brussels made clear it would not grant pan-EU access rights to City institutions. At risk is London’s gravitational pull as a financial services centre — a combination of scale and experience and frictionless access to global markets — and between 7 per cent and 20 per cent of the UK’s gross domestic product, depending on how broadly you cast the net.

The City is too big to be a rule taker, as noted by the former governor of the BoE. But it is unfortunate that the government has done so little to protect an industry where the UK has competitive advantage, preferring to defend a business where it has comparatively little: fishing.

The Brexit deadline looms even as the pandemic continues to suck the air out of the City, forcing its denizens to work from home. The Square Mile is quieter than a carp pond. The danger is that once the cobwebs of relationships that energise and sustain the place drift away, they will not materialise again. 

I almost miss the punishment lunches convened in starchy restaurants by bosses determined to teach me the error of my ways.

A tirade by email just isn’t the same. I still haven’t reached the end of a recent missive from a robotics entrepreneur. It is unlikely I ever will, as I head off to write tales of a less financial kind. But he’s probably right — hacks will soon be replaced by robots with opinions.

The world is in a new phase of negative interest rates, which will test those who passed their financial literacy exams even a decade ago. Then the first rule was pay off your mortgage. Now money advisers reckon interest rates are so low it may be better to invest cash elsewhere — just not in a bank. The FT’s launch of a Financial Literacy and Inclusion Campaign is well timed. The next few years of rising unemployment will take its toll on everyone. 

Debt and ambitious bosses will still poleaxe businesses and rob investors of their returns. But I leave it to other Lombardiers to catch them at it. It is a precarious but invigorating experience, made all the richer by the support of readers and contacts. It only remains for me to say: so long everyone, and Boris — if you’re reading — no thanks to you for all the fish.



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