When King Charles III is going to be crowned British King in London this Saturday, millions (not only Britons) will celebrate with him. Compared to the coronation of his mother 70 years ago, Charles’ celebration will be a bit smaller – as have many economic indicators on the island in recent months. The British financial sector post-Brexit will not be left unscathed either. Competitors are now hot on its heels, even in business sectors that were once considered safe.
Charles Windsor becomes King Charles III – it has been a long road for the “eternal heir” and Prince of Wales to the British throne. While his mother, Queen Elizabeth, was only 25 years old at her coronation, Charles will be 74 when the crown is placed on his head in Westminster Abbey on Saturday. Britons are rejoicing (the following Monday is a bank holiday), and local celebrations and street parties will take place across the United Kingdom (UK), as well as a concert outside Windsor Castle.
The Coronation is also expected to give a boost to the domestic economy. The celebrations surrounding Queen Elizabeth II’s platinum throne anniversary last spring prompted Britons to spend around GBP 87 mio. more on food during the “Jubilee weekend” than the annual average in 2022. Marks & Spencer, for example, is expected to sell one million biscuit and tea tins made especially for Charles’ coronation.
It is difficult to say how important the monarchy still is to the British today. According to a BBC poll, 58% support it, while 26% would prefer an elected head of state. Among younger people, however, barely a third (32%) are still in favour of the monarchy, and more than three quarters (78%) are not interested in the royal family (and its recurrent tabloid scandals and fuss) at all.
Few rays of hope for Sunak government
The United Kingdom has been struggling with other massive problems for some time now. Prime Minister Rishi Sunak, who was promoted to office as King Charles only a few weeks later, first had to pick up the pieces of his predecessor Liz Truss’ short but all the more chaotic leadership.
At 50 days, her tenure was not only the shortest ever by a British prime minister (officially shorter than the shelf life of a standard British iceberg lettuce, too). Truss and her finance minister Kwasi Kwarteng (in office for an even shorter period) also managed to drive the British pound to the brink and mortgage rates in the country up with their reckless budget promises.
The strikes that have been going on for months among various professional groups, especially in the health sector, on trains, among teachers and – even on the Coronation weekend – at London Heathrow Airport not only extend waiting times for ambulances by hours and for treatment by months – they have also severely weakened the economy.
New borrowing in the UK has recently been somewhat lower than expected, but still pushed the national debt to a staggering 99.6% of GDP at the end of March – the highest level since the early 1960s. Only recently, the International Monetary Fund downgraded the UK to last place among the G7 countries in its forecast for this year.
The few bright spots for Sunak’s government so far include the “Windsor Agreement”, the first post-Brexit deal between the EU and UK around the complicated Northern Ireland question, and the low but nevertheless stubborn growth that the UK economy has displayed this year, especially domestically.
Blows to Britain’s economy and industry
In recent months, the local economy has suffered a number of blows, downgrades and scandals: for example, in January, when the high-flying dreams of Britain’s role in international commercial space flight came to an abrupt end after the first, unfortunately failed launch of a satellite in Cornwall. This was followed by the insolvency of the operator Virgin Orbit and complaints about the excessive bureaucracy of the UK Space agency, which allegedly no longer makes such ventures economically viable.
Or in April, when the British Competition and Markets Authority (CMA) prohibited the USD 69 bn. takeover of the computer games manufacturer Activision by Microsoft. Microsoft’s president Brad Smith then told the BBC that this decision was “the darkest day in our four decades in Britain”. He wondered whether the EU maybe a better place to invest.
In the same month, more than a dozen women made allegations against executives of the British industry umbrella organisation CBI for sexual assault and two alleged rapes at CBI events. This led to an exodus of many prestigious member companies.
London loses out on IPOs, equity and currency trading
The wind has also become rougher for the British financial industry in recent months. The reason for this is mostly due to the nasty “B” word: Brexit.
There is still no agreement between the EU and the UK on the future of the services industry, including the financial industry. It still employs over one million people and contributed almost GBP 39 bn. or 4.7% to total UK government tax revenues in the financial year 2021/22.
In the competition for the largest stock trading centre in Europe, Paris has now overtaken London. New prestigious IPOs of British companies, such as that of chip manufacturer Arm, do not take place in London, but in the US. In international currency trading, with around USD 7.5 trillion traded there every day, London continues to lead the world – but here, too, countries like the US, Singapore, Germany and France are catching up.
Labour market gets tougher for London bankers, too
Meanwhile, the London office property market, one of the largest in the world, is being hit by a lot of Working from home activity and rising vacancy rates. In recent months, it has performed as weakly as it has since the Corona quarters of 2020. Four out of ten British employees work from home at least one day a week, according to the Office for National Statistics (ONS), up from 12% before the pandemic.
The recent turmoil in the banking world (Silicon Valley Bank, Credit Suisse, etc.) is also leaving its mark on Britain’s capital: while the supply of vacancies in the City fell by almost a third (31%) in the first quarter of this year compared to the same period in 2022, the number of jobseekers rose by 12%. The figures show that the labour market is also getting tougher for bankers in the face of general economic uncertainty and the threat of redundancies.
King Charles III does not have to worry about such trivial problems. He has his job for life.
