Fish for finance

Overview

Fish for finance is the popular phrase used to describe the possible trade-off betrween two major UK industries that was considered by both sides during the trade negotiations between the United Kingdom and the European Union (EU) over their future relationship following Brexit in January 2020. The Brexit withdrawal agreement between the two parties called for an agreement on fisheries to be concluded by June 2020, followed by an agreement on financial services at the end of July, deadlines which were both missed. Both were expected to be part of the final EU–UK trade agreement reached by the end of 2020, the end of the Brexit transition period. The final agreement had some broad outlines for a future fishing deal, primarily gradual EU concessions of fishing quota in UK waters, but was largely silent on finance. British commercial fishermen were among the most ardent supporters of Brexit before and after the 2016 referendum that began the process when a majority of voters opted for the country to leave the EU. Many of them had expressed discontent with the EU's Common Fisheries Policy (CFP), under which the UK has had to share its exclusive economic zone (EEZ) with other member states' fishing fleets; Brexit proponents have argued that British fishermen should be able to catch at least the majority of the fish in that portion of the country's EEZ around the island of Great Britain and off the coast of Northern Ireland. During the UK's membership in the EU, much of the fish that British fishermen have historically caught in the EEZ has been exported to mainland Europe, leading many British fish processors, fish farmers and inshore fishermen (whose catch of primarily shellfish is popular with consumers in France and Spain, but not the UK) to seek a continuation of the pre-2021 frictionless trade situation; conversely a majority of the fish consumed in the UK is caught outside British waters. It was feared that EU fishermen, who had themselves historically fished British waters, planned to block imports of British fish, and even all British imports, if the UK limited their rights to do so. Industry advocates on both sides feared this would lead to potentially lethal violence on sea and land, in addition to the economic consequences of a trade war. The EU's eight western coastal states, whose fleets partake of the catch in British waters, asked that no overall trade deal with the UK be concluded without a fisheries agreement; the UK conversely believed the issue did not have to be settled first. The British financial sector, which employs more people and accounts for a much greater share of the country's gross domestic product (GDP) than fishing, made clear that it would like at the very least a declaration of stock market equivalence similar to what the EU has extended to the US, Hong Kong, Australia and (in the past) Switzerland. Ideally the City wished to maintain the level of access to EU markets it has enjoyed during the UK's membership in the bloc. EU officials and negotiators have said that they would be inclined to continue allowing that level of access only if the UK is likewise willing to allow the same level of access to its fisheries. Unlike the UK's fishermen, financial companies can move to take advantage of more favourable regulatory climates, and many have already begun relocating staff and operations to Dublin, Frankfurt, Paris or Amsterdam, or elsewhere in the EU. Deadlines set originally by the Withdrawal Agreement were missed, in part due to the disruption caused by the COVID-19 pandemic. By the end of 2020, it did not appear to observers or the parties themselves as if a deal would be reached, and the UK and EU both began to prepare for the worst possible impacts of that transition. On 24 December, a deal was announced with a compromise on fishing quotas which UK fishing industry spokesmen found disappointing. Negotiations continued on a substantial financial services agreement, despite missing the original deadline of 31 March 2020.

Planned negotiation timetable

The Withdrawal Agreement by which the UK left the European Union at the end of January 2020 included a non-binding political declaration, concluded the previous October, setting the terms for post-Brexit relations, with the intent of reaching a comprehensive trade agreement by the end of 2020. The declaration sets forth specific dates prior to that for negotiating agreements on particular economic sectors. Among them are fisheries and financial services. On fishing, the declaration calls for the two parties to 'use their best endeavours to conclude and ratify their new fisheries agreement by 1 July 2020 in order for it to be in place in time to be used for determining fishing opportunities for the first year after the transition period'. No similar deadline is established for an agreement on financial services. Instead, the two sides committed to assessing each other's regulatory frameworks for stock market equivalence by the end of June. Before that date, the agreement called for both sides to have a summit conference to assess the progress of the talks. Should the British government have desired an extension of the transition period to allow for longer negotiations, it could have requested one of up to two years no later than 1 July; the EU would have had to agree. These terms are set by the Withdrawal Agreement; to modify them would require a formal modification to that agreement itself.

For the government to have requested an extension, it would also have to get permission from Parliament. An amendment to the bill implementing Brexit, barred the government from requesting one. Prime Minister Boris Johnson further told Parliament he would not request one, arguing that for trade talks to produce timely results, there needs to be a clear and early deadline. None of these deadlines were met; the disruptions resulting from the COVID-19 pandemic, which required several rounds of talks to be held virtually, have been held to blame, but the two sides remain very far apart in on the issues. Negotiations on fisheries continue with little indication of progress. By 30 June, the UK had only completed and returned four of the 28 questionnaires about its securities market regulation sent it by the EU; three weeks later, the government reported that all had been completed and returned. At that same time, the government confirmed it would not be seeking an extension, committing the UK to fully leaving the EU at the end of the year no matter what the circumstances.

History of fishing conflicts and agreements between the UK and other nations

Seafood has long been a staple of inhabitants of the British Isles, surrounded by one of the world's richest fisheries. Danish and Norse raiders in the ninth century brought one fish species in particular, the North Sea cod, into the national diet. Other whitefish like halibut, hake and pollock, also became popular. By the end of the 14th century, fishing boats from the east coast of England, then as now home to most of the English fishing fleet, were sailing to Icelandic waters in search of these catches; their landings grew so abundant as to cause political friction between England and Denmark, who ruled Iceland at the time. The Danish King Eric banned all Icelandic trade with England in 1414 and complained to his English counterpart, Henry V, about the depletion of fishing stocks off the island. Restrictions on British fishing passed by Parliament were generally ignored and unenforced, leading to violence and the Anglo-Hanseatic War (1469–74). Diplomats resolved these disputes through agreements that allowed British ships to fish Icelandic waters with seven-year licences, a provision that was struck from the Treaty of Utrecht when it was presented to the Icelandic Althing for ratification in 1474. This started a centuries-long series of intermittent disputes between the two countries, the most recent of which were the three "Cod Wars" between 1958 and 1976. Fishermen in Scotland, a country more dependent on their industry than England, bitterly resented the competition from Dutch boats in the country's waters, and when their king James united the Scottish and English crowns in 1609 as James I he reversed what had been the tolerant policies of his Tudor predecessors toward foreign fishing in British coastal waters and began requiring a steep licence fee. Dutch legal scholar Hugo Grotius had at the same time argued, in response to clashes between his country and Portugal, for the mare liberum principle, under which the seas were common property and all nations and people had a right to use it as they chose. England's John Selden responded in 1635 with the mare clausum "closed sea" principle under which a nation could appropriate the seas as easily as it would land. During the 18th century, British governments complained to France and the Netherlands as well as Denmark about their countries' fishing boats venturing into British waters. Eventually the Dutch agreed to respect a six-mile (9.7 km) limit, going no closer to British shores. After the Napoleonic Wars, French fishermen became much more aggressive around Great Britain, making their presence known along the Scottish coast and in the English Channel; the complaints they generated from British fishermen were reciprocated against them by the French. In 1843 the two countries concluded the first ever international agreement establishing exclusivity zones for their fisheries, of three miles (4.8 km) from their respective shores.

Domestic demand for seafood in the UK grew rapidly following the Industrial Revolution, as the development of the country's rail network allowed fresh fish to reach a wider market away from the coasts; fish and chips, first served in the 1860s, generally made with either cod or haddock, quickly grew to become a staple of English cuisine and a national symbol. In response, steam-powered trawlers, which could go farther, stay out longer and catch more fish than their sail-driven predecessors, were added to the fishing fleet. This development has been considered the beginning of the decline of the British fishing industry, since even though its fish landings continued to increase until the late 1930s, when they were more than five times those of the late 2010s, the fleet's productivity, measured in fish landings per unit of fishing power (LPUP), began a steady decline that continues. In the early 20th century, the return of modern British fishing boats to inshore waters off the northern coast of Norway after almost three centuries when they had respected royal decrees barring them from those areas, provoked a local backlash, and the newly independent Norwegian government began specifying conditions under which foreign boats could fish the country's waters north of the Arctic Circle. The seizure of a British trawler for violating those laws started negotiations between the two governments that World War I interrupted; afterwards the incidents continued, resulting in a 1935 Norwegian royal decree claiming the waters within 4 nautical miles (7.4 km; 4.6 mi) of its shoreline as exclusively Norwegian, but enforcing it only irregularly pending an agreement with the UK. Thirteen years later, no agreement had been reached and after Norway began strictly enforcing its limit, the UK brought suit at the International Court of Justice, arguing that Norway's limits did not follow its coastline in that area as strictly as international law required. In 1951 the court found in Norway's favour. British trawlers began again heavily fishing the waters near Iceland, leading to the confrontations known as the "Cod Wars" of 1958–61, 1972–73 and 1975–76. A threat of actual violence was present, with fishing boats escorted to the water by the Royal Navy and the Icelandic Coast Guard similarly attempting to chase them away and using long hawsers to cut nets from the British boats; actions that resulted in one serious injury on the British side and the death of an Icelandic engineer. Ships from both sides suffered damage from ramming attacks.

A British ban on the import of all Icelandic fish backfired when the Soviet Union bought the catch instead. As this was during the Cold War, this led to fears that Iceland might carry out its threats to leave the North Atlantic Treaty Organization (NATO), and ultimately the other nations of the military alliance brokered a resolution where the UK had to accept Iceland's establishment of a 12-nautical-mile (22 km) exclusive zone around its shores where only its own ships could fish and a 200-nautical-mile (370 km) exclusive economic zone (EEZ) where other nations' fishing fleets needed Iceland's permission. The effective loss of the Icelandic fishery had drastic effects on the British fishing industry, already dealing with the ongoing decline in both LPUP and landings. In the home ports of many of the ships that had been fishing off Iceland, an estimated 1,500 people lost jobs either on boats or in fish processing plants; workers in shore-based support industries, and those other sectors that relied on local economies built around fishing, were also unemployed in significant numbers. Some of those ports, such as Fleetwood on the Lancashire coast, and Grimsby, at the mouth of the Humber, have never recovered.

EU membership era

Since the 1976 ending of the Cod Wars had forced the UK to abandon the "open seas" international fisheries policy it had previously espoused, Parliament passed the Fishery Limits Act 1976, declaring a similar zone around its own shores, a practice later codified into the United Nations Convention on the Law of the Sea (UNCLOS). It was not able to enforce them for long against European Communities member countries, as the UK had joined it too, including the EU's predecessor, the European Common Market. As a condition of its membership, the UK had to accede to the Common Fisheries Policy (CFP), for which the basics had just largely been negotiated, and share those exclusive waters with other member states, including France and the Netherlands, as well as Norway, a non-member state that jointly manages its fishery with the EU, and the Faroe Islands, an autonomous Danish archipelago northwest of the UK. Sir Con O'Neill, who led the UK's negotiating team, said fishing was the most difficult issue to resolve as part of the UK's accession, calling it "economic peanuts but political dynamite". The government at different times feared that it would cost it its parliamentary majority in favour of accession, as had happened in Norway.

Prime Minister Margaret Thatcher's government successfully lobbied for the CFP to include an increase in the Total Allowable Catch (TAC) for British vessels for some species, such as haddock, to make up for their lost Icelandic fishing grounds. In the years before 1983, when the CFP came into full effect, many British fishermen believed that fleets from the seven other coastal states increased their catches in British waters since the quotas for the policy, meant to conserve stocks and curb the ongoing overfishing, were based on historical data. After the CFP, all member states' EEZs were shared. British boats could fish off the shores of any of the other seven coastal member states, and their boats could fish in British waters, as desired. The British fishing industry continued to decline, exacerbated by the use of newer technology that required less labour and restored profit margins. While the CFP established national quotas, it left it to the member states to decide how to allocate them among its own fishing boats. The UK, unlike the others, divided them into "fixed quota allocations" (FQAs) and allowed its fishermen to trade them freely, buying and selling shares of its TAC for various species with each other and even foreigners. This led to the "quota hoppers" controversy in the mid-'80s when Spanish fishermen set up British companies to buy British ships and their corresponding quota allegations, then landed fish caught in British waters, counting against the British quota, in Galicia for processing and ultimate sale in Spain, which had recently joined what had by then been renamed the European Economic Community. Thatcher's government responded by passing legislation effectively requiring that all British fishing boats be owned by British citizens or companies that were 75 per cent British-owned, and controlled or supervised from the UK. The Spanish companies challenged this in court as a violation of EU law and treaties, resulting in a seminal series of decisions that established the primacy of EU law over national law where the two were in conflict. The CFP did not put an end to confrontations at sea between the UK and other nations, both in and out of the EU. French fishermen clashed with the Royal Navy in 1993 over their rights in the waters near the Channel Islands. In 2010 the 'Mackerel War' erupted after Iceland and the Faroes changed their minds about previously agreed quotas of that fish in their waters, where stocks had been moving to in response to climate change, and vastly increased that portion they allowed themselves from their EEZs; in response, Scottish trawlers blocked a Faroese ship from landing 1,100 tonnes (1,100 long tons; 1,200 short tons) of mackerel to a Peterhead processing plant. Two years afterward, French boats started the 'Scallop War', throwing rocks at British dredgers taking those shellfish from beds in the English Channel the French claimed were within 12 nautical miles (22 km) of their coast and thus not for the British to take. Some fishermen went to elaborate lengths to evade quota enforcement. In the late 2000s Scottish authorities uncovered a 'black landings' scheme in which over two dozen boat captains and three large processing plants had conspired to process and sell £63 million worth of mackerel and herring caught in violation of quota. At one Peterhead plant, they built an elaborate system of underground pipelines and valves, including scales and computers known only to those involved, to conceal the true origin of 170,000 tonnes (170,000 long tons; 190,000 short tons) of fish over quota. Most pleaded guilty at trial and were fined. With the passage of the Marine and Coastal Access Act 2009, the UK finally established its own EEZ, using the same boundaries created for fishing in 1976, replacing the definitions of its territorial waters it had used in different contexts, such as fishing, mineral rights, and pollution control. Its boundaries were formalised with a 2013 Order in Council deposited with the United Nations the following year.

Brexit

By June 2016, when British voters chose to leave the EU, the CFP limited British fishermen to 36 per cent of the total catch from their home country's waters, which amounted to a quarter of the total EU catch. Cod stocks had rebounded to sustainability and the British fleet's net profit margin had become the highest in the EU at 35 per cent, and second only to Spain's in terms of capacity by gross tonnage. British fishermen still strongly supported Brexit due to the restrictions of the CFP, which many identified as the reason for the industry's decline; the overall size, capacity and power of the British fishing fleet had declined by about 30 per cent since 1996. A poll taken two weeks before the referendum found 92 per cent of fishermen planned to vote Leave, with many of those who did believing that departure from the EU would benefit their industry. Brexit proponents used the plight of the UK's fishermen as a large part of its campaign for Leave, taking advantage of their sentimental and symbolic importance to the country. "Here the referendum was lost, in the romance of the sea, the rugged cliffs and coasts of our island story among old salt spirits of a seafaring nation", Polly Toynbee observed in The Guardian after a visit to Hastings. "Economics says fishing is of nugatory value, but politics says fishing is deep-dyed in national identity, down to the last fish and chip shop." The fishermen themselves reiterated their longstanding complaint that their governments had regularly sacrificed their interests from the country's EU accession onward. They pointed to perceived inequities such as fishing fleets from other EU countries being allotted 60 per cent by weight, and specifically imbalances such as France being allowed 84 per cent of Channel cod while the UK was limited to 9 per cent. A 2017 study of EU fishing data by the NAFC Marine Centre of the University of the Highlands and Islands, done at the request of the Shetland Fishermen's Association, found that the rest of the EU takes more fish from British waters under the CFP than the UK does from other EU countries' EEZs—boats from the rest of the EU take six times more fish and shellfish by value, and 10 times more by weight, than British boats do, whereas British boats only take 12 per cent of the total EU catch from outside the UK. Another NAFC study the following year found that Iceland and Norway, outside the CFP and EU, landed 95 and 84 per cent of the catches from their EEZs. When the vote was held, the results from the fishing communities along the south and east coasts of England, who blamed the CFP for their industry's decline, came in strongly for Leave. In Scotland, the Parliamentary constituency of Banff and Buchan, where Peterhead and Fraserburgh, two of the largest fishing ports in the UK (and at the time, the EU), are located, was the only constituency to support leaving the EU, by a margin of 54 per cent, a higher margin than the 52 per cent overall majority and much higher than the 38 per cent support average support for Leave across Scotland. A few months after the vote, Bertie Armstrong, head of the Scottish Fishermen's Federation (SFF), said the UK should not begin renegotiating neighbour states' fishing rights in British waters until after it had completed the process of leaving the EU. "In our strong opinion, you do not in the Brexit process organise access for all those who want it—there has been 40 years of distortion with that—you organise it afterwards", he told the House of Lords. "Allow them to have the fish, of course, but access is a matter of negotiation after Brexit."

21st-century British fishing industry

After nearly half a century of membership in the EU and its predecessor organisations, the relationship between British fishermen and their colleagues and consumers in those states remaining members of the EU is closely intertwined. Most of what British fishermen catch in their waters, particularly shellfish, which is not controlled by a CFP quota, is sold on the continent. Similarly, most fish sold and consumed in the UK has been caught elsewhere. The UK runs a trade surplus in fish, exporting 80 per cent of what it catches—40 per cent of the total catch in British waters by weight but 60 per cent by value—and importing 70 per cent of what it eats.

This is a result of differences in national tastes and changing fish stocks. To meet demand for cod, the most popular fish to eat with chips, the UK imports 83 per cent of that fish it eats, from international waters off Scandinavia, usually the Barents Sea, plied mostly by Icelandic, Norwegian and Russian vessels. In turn, the herring abundant in British waters is taken mostly by fishermen from other EU countries and exported to Germany where it is the third most popular fish, much of it used to make Rollmops, a comfort food similar to fish and chips popular as a hangover cure, since there is less demand for herring in the UK than there was before the species was overfished in the 1970s; kippers have been a less common breakfast since then. Two-thirds of the UK's shellfish catch, at £430 million a quarter of all British fish exports by value, ends up in France and Spain; diners in the former country are also partial to saithe, a species largely passed up in the UK. British whelks also feed a thriving market in East Asia. Subsectors of the British fishing industry vary in the benefit, or lack thereof, they derive from trade with the EU and the CFP. Deep-sea fishermen have been the most vocal supporters of Brexit, blaming EU restrictions for the decline of their industry in the UK and competition from other countries (and Norway) that they see as unfair. Inshore fishermen, whose take of primarily shellfish is exempt from quota and who largely work in coastal waters that have always been exclusively British, regulated not by the EU but by the UK's own regional Inshore Fisheries and Conservation Authorities, were more ambivalent, believing that Brexit will primarily benefit the deep-sea fleet and concerned about the effects a trade war or the resumption of trade barriers could have on their markets should EU countries retaliate for any restrictions the UK might impose if a deal cannot be reached. British fish processors, a £4.2-billion industry, and fish farmers, many of whom also depend heavily on Continental markets, also hoped for a seamless transition to post-Brexit trade. The EU's free movement of labour policy has also benefited landlords in communities with processing plants where the fishermen themselves strongly supported leave; many workers from elsewhere in the EU, particularly Latvia, have come to work in the plants and rented local housing. Seafood restaurants in the UK, too, have also benefited from EU staff, since workers from those countries are more likely to consider working in the front end of restaurants as waitstaff and maître d's as a career rather than a way station to one.

Disparities exist within the British fishing industry as well. In 2004, a report by the Royal Society of Edinburgh found that Scotland accounted for 62 per cent of the UK's landings by value, and half its fish processing industry, despite being home to only 8.6 per cent of the country's people; by 2019 the Scottish fishing industry was still described as being 53 per cent of the total UK industry. Much of that Scottish catch, more than half of which is pelagic species, comes in turn from just 27 trawlers owned by several large companies based in the country's North East and Shetland that primarily harvest pelagic fish. These companies themselves are owned by five families on the Sunday Times Rich List, which between them control outright or in part nearly half of Scotland's FQAs, according to a 2018 Greenpeace report. Three-quarters of the boats in the Scottish fleet work entirely in inshore waters, many off the country's west coast, catching primarily the langoustine popular with French, Spanish and Portuguese consumers. This large fleet's shellfish catch is conversely overall the smallest portion of the Scottish annual catch. In England it makes up more than a majority, in Wales almost the entire catch, and in Northern Ireland the largest portion, though not a majority, of the catch as measured in tonnes.

Greenpeace also found disproportionate concentrations of quota ownership among the English fishing fleet, as well, with foreign-owned (mostly Dutch, Icelandic or Spanish) but British-flagged vessels also holding almost half the quota. One, the Dutch 'supertrawler' Cornelis Vrolijk, registered to Caterham, owns 23 per cent of the British TAC and 94 per cent of the UK's herring quota. A further 30 per cent is also owned by three Rich List families, whom Greenpeace called the industry's 'codfathers'. As in Scotland, the small boats (less than 10 metres (33 ft) long) that fish inshore waters exclusively make up the bulk of the fleet (77 per cent) but hold less than 3 per cent of the quotas for fish species subject to quotas under the CFP. Unlike England, Scotland's share of the quota is mostly Scottish-owned, due to the prevalence of family-owned businesses in that sector there. Most of Wales' very small share of the UK quota, by contrast, is foreign-owned (The total foreign ownership of British quotas is 13.2 per cent, third in the EU after Belgium and Denmark). Under current British rules, foreign-owned boats that hold quota shares must have one of five economic connections to the UK, such as a majority British crew or landing more than half their catch at British ports, to do so. Fishermen who advocated for Brexit would like to see those requirements tightened, proposing that ownership, crew and catch all meet 60 per cent thresholds, but due to unclear legal status, foreign companies holding quota under the old terms would likely sue to block such a law. In Northern Ireland, 55 per cent of the almost exclusively British-owned quota is held by a single boat, the Voyager. This share was large enough that after the company that owned the 76-metre (249 ft) supertrawler decided it was time for a new boat and scrapped the old one in 2015, it turned a £2.5-million profit in the meantime by leasing the quotas to other fishermen until its new boat arrived in 2017. When that ship arrived, at 86 metres (282 ft), it was too large for the old ship's harbour at Kilkeel and so lands its catch outside the UK in Killybegs, Ireland's largest fishing port.

Financial industry in the United Kingdom

London has been a commercial centre since its establishment within the bounds of the present City of London, later to be used metonymically to refer to the UK's financial industry, during Roman times; it has been the capital of England and, later, the United Kingdom ever since. In the 16th and 17th centuries, the modern British banking industry began to grow along with the rapidly expanding city, a magnet for immigrants, its economy fuelled by mercantile trade with Europe and the rest of the world. In 1571, financiers began congregating at Jonathan's Coffee-House to make deals and review regularly posted prices for securities and commodities, a group meeting from which the London Stock Exchange (LSE), the world's oldest, arose. The Bank of England, established privately in 1694 to fund the British government's expenses in the Nine Years' War, eventually became the UK's central bank. The Bank established its offices early on in Walbrook in the City of London, moving in 1734 to its current home on Threadneedle Street, followed by other banks and financial services companies. For a while, the UK's financial industry was in the same neighbourhood as the centre of its fishing fleet, as reflected in street names still in use like Old Fish Street Hill. The Billingsgate Fish Market was originally situated nearby; it has since followed the banks to Canary Wharf. The venture capital industry grew out of the financing of high-risk, high-reward whaling expeditions. At that time London competed as the centre of European finance with Amsterdam, whose financial innovations the British city's bankers, brokers and traders quickly brought into use. As the political and economic influence of the Netherlands declined in the 18th century, Paris emerged as a replacement rival. After the French Revolution of 1848 forced the Bank of France to suspend specie payments, London became, as Walter Bagehot put it 25 years later, "the sole great settling-house of exchange transactions in Europe ... The number of mercantile bills drawn upon London incalculably surpasses those drawn on any other European city; London is the place which receives more than any other place, and pays more than any other place, and therefore it is the natural 'clearing house.'" World War I damaged London's position slightly, allowing New York to compete closely. The Bank of England was nationalised in 1946, but the city's banking interests still controlled its policy decisions, favouring the financial sector even as manufacturing declined, keeping the pound and interest rates high. In those years, New York overtook London, but then the Eurodollar market emerged in the 1950s, as a result of the Marshall Plan, and London's banks and traders were able to corner it, restoring London to its earlier position. By 1971, the Eurodollar market was equal in size to the French money supply and 160 banks from 48 countries had branches in London. London gained comparative advantage due to lighter regulations under English common law, allowing its banks to lend to Communist countries during the Cold War more freely than their American competitors could, and its time zone, with the morning hours of the trading day overlapping with the end of the day in the emerging Asian markets and the later hours coinciding with New York's morning hours. Reform began in 1979 with the removal of some foreign exchange controls imposed during World War II; the Eurodollar market had grown over a thousandfold by 1983 from what it was in 1960. In October 1986, London became even more attractive for international finance after Margaret Thatcher's government settled a competition law suit the previous government had brought against the LSE. The ensuing reform, known later as the "Big Bang", removed many remaining older traditions on the LSE, such as a prohibition on foreign membership, divisions of labour between market makers and brokers, fixed brokerage commissions and open outcry trading. The City itself went further, with many companies moving to pricing products in US dollars rather than pounds sterling and acting as intermediaries instead of lenders; by 1995, three years after the UK's membership in the EU made it part of the Single Market, the LSE's daily turnover had quadrupled. The influx of foreign capital led to many British banks and other financial institutions merging with or being acquired by larger American, German, Swiss or Japanese companies, strengthening the city as a sector at the cost of much of its domestic ownership. Within a year of the Big Bang, 75 of the 300 LSE member companies were foreign-owned. "If it's not bolted to the floor we move it to London", an American banker told an analyst asking about his company's European operations.

Regulatory changes even affected the city's geography. The Bank of England had previously insisted all its banks have their offices within a 10-minute walk of the governor's office on Threadneedle Street near the City centre, but that rule was dropped when the Securities and Investments Board (later the Financial Services Authority (FSA)) was created to regulate the industry. This accelerated the move to construct and occupy new offices three miles (4.8 km) on the Isle of Dogs in Canary Wharf, an area of the Docklands that had been severely damaged by German bombs during the war. After some early struggles, Canary Wharf began attracting construction and companies by the end of the 20th century, its skyscrapers rivalling similar ones in the city as both dominated the London skyline. Throughout the end of the 20th century, and into the 21st, the financial industry continued to grow and play an important role in the British economy as one of its most productive sectors, accounting for 16 per cent of all British exports, and 39 per cent of all exported services. To preserve the city's independence, the UK continued to use the pound and remained one of the few EU members outside of the Eurozone. Finance continued to grow at the expense of manufacturing, since the capital inflows kept the pound high, resulting in regular trade deficits. These were blamed for the widespread negative impacts of the 2008 financial crisis, which resulted in a change in how the industry was regulated, with the FSA dissolved in 2012 and its responsibilities split between the new Financial Conduct Authority, which enforces the laws regarding trading and products, and the Bank of England's Prudential Regulation Authority, trusted with maintaining the stability of the financial system as a whole.

Brexit

Prior to the Brexit referendum in 2016, financial companies were divided over the potential effects of the UK leaving the EU. As a member state, companies in the UK were granted "passporting" rights by the EU, allowing them to sell services and products to clients throughout all 26 other states without any special permission from those states. They also benefited from trade agreements between the EU and third parties, such as the US,