It was in a bakery on Pudding Lane 350 years ago today that a small spark from an oven left overnight ignited what was to become the Great Fire of London. The fire consumed over 13,200 houses, 87 parish churches, St Paul's Cathedral, and most of the buildings of the City authorities. It is estimated to have destroyed the homes of 70,000 of the city's 80,000 inhabitants.
This epic conflagration raged for three days, destroying much of the medieval city. The despair and confusion felt by citizens at the time must have been overwhelming. Similar feelings, I expect, were felt by citizens of other European countries in the broader history of Europe too at their times of unexpected change. For example, each of the world wars, the rise and fall of the Berlin Wall, the French and Russian Revolutions, and so on.
Whilst these events are not all strictly comparable, reading about the Great Fire anniversary led me to think about another key chapter in Europe’s history, the recent EU Referendum in the UK and the impact the decision has had on both the public and business: fear, uncertainty and confusion.
Britain’s decision to leave the European Union, or ‘Brexit’ as it is more commonly known, will profoundly affect the relationship between UK and the rest of the EU in the years to come. In the short to medium term, there is the risk of substantial disruption. This risk exists for all economic activity, but it exists especially for financial services due to the sector’s vulnerability to any loss in confidence, and to changes in legal and regulatory environments.
The challenge that lies before all financial institutions which operate in both the UK and the rest of Europe is to try and minimise this disruption.
At the Eurofi conference in Bratislava next week, I will be saying to delegates that we need to work together to protect the progress we have made. After years of trying to break down barriers, that we do not re-create barriers between the EU-27 and the UK by ensuring that the rights of all parties to access financial markets are safeguarded. And by continuing the work of building a Capital Markets Union that encompasses all of Europe too. A project in which I still believe is important to the future of all European economies.
It may be the case that the new institutional arrangements that arise out of Brexit make this more difficult. But in my mind there is no better alternative. Any increased segmentation and fragmentation of financial markets will impose costs on all of us, the public included, as well as risk disrupting the financial system. Financial stability is critical in protecting Europe’s 500 million citizens’ investments and savings.
The ‘Great Fire’ 350 years ago presented both challenge and opportunity to London and in many ways, many Europeans too with London being a key trading partner in 1666 as much as it is today. In the face of the same feelings of fear, uncertainty and confusion many may feel today, London transformed, and for the better. The same could be said about Brexit.
Transformation, in whatever guise this may be, is inevitable. And whilst we may not know what the future holds, it is our hope that all European countries unite positively to overcome the challenges, minimise disruption, and ensure the stability and smooth functioning of Europe’s capital markets – a prerequisite for future prosperity for all businesses and citizens across the region.