From Big Bang to Brexit: The City of London and the Discursive Power of Finance
| Author | Scott James,Hussein Kassim,Thomas Warren |
| DOI | http://doi.org/10.1177/0032321720985714 |
| Published date | 01 August 2022 |
| Date | 01 August 2022 |
| Subject Matter | Articles |
https://doi.org/10.1177/0032321720985714
Political Studies
2022, Vol. 70(3) 719 –738
© The Author(s) 2021
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DOI: 10.1177/0032321720985714
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From Big Bang to Brexit:
The City of London and the
Discursive Power of Finance
Scott James1, Hussein Kassim2
and Thomas Warren2
Abstract
This article aims to generate new insights into the City’s influence during the Brexit negotiations.
Integrating theories of discursive institutionalism and business power, we set out to analyse the
dynamic ‘discursive power’ of finance. From this perspective, a key source of the City’s influence
historically has been a powerful strategic discourse about London’s role as Europe’s leading global
financial centre. This was strengthened following the financial crisis to emphasise its contribution to
the ‘real’ economy and emerging regulatory threats from the EU. We argue that Brexit challenges
the City’s discursive power by removing ‘ideational constraints’ on acceptable policy discourse,
and undermining the ‘discursive co-production’ of financial power by government and industry.
By encouraging financial actors to re-evaluate their interests, this has contributed to increasing
discursive fragmentation and incoherence. Evidence for this comes from the City’s ambiguous
policy preferences on Brexit, and the emergence of a rival pro-Brexit ‘discursive coalition’.
Keywords
City of London, financial industry, Brexit, discursive institutionalism
Accepted: 4 December 2020
Introduction
The UK’s decision to withdraw from the EU will have far-reaching implications for the
UK financial sector in the City of London. The ‘City’ represents a geographically clus-
tered network of commercial financial trading, advisory and intermediation practices sup-
plying financial services around the world (Baker and Wigan, 2017: 7; Ingham, 1984: 60;
Longstreth, 1979: 161; Talani, 2012: 26). While the City has a long history as an interna-
tional financial centre, many global financial firms today use London as a base from
which to provide financial services across Europe through lucrative ‘passporting’ rights.
Hence, the EU accounted for 43.8% of the UK’s net financial services exports in 2017,
1Department of Political Economy, King’s College London.
2School of Politics, Philosophy, Language and Communication Studies, University of East Anglia.
Corresponding author:
Scott James, Department of Political Economy, King’s College London, London, UK, WC2B 4PX.
Email: scott.james@kcl.ac.uk
985714PSX0010.1177/0032321720985714Political StudiesJames et al.
research-article2021
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720 Political Studies 70(3)
constituting 23.6% of total UK service exports to the EU, and contributing £26 billion to
the UK trade balance (Ward, 2018). We would therefore expect the financial industry to
deploy its formidable lobbying capabilities to persuade the UK government to prioritise
retaining EU market access after Brexit.
Yet recent studies offer divergent views on the City’s influence since 2016. From a
political economy perspective, Thompson (2017) argues that Brexit represents a ‘his-
toric defeat’ for the City, rooted in a series of regulatory clashes generated by the euro-
zone crisis and the breakdown of traditional UK statecraft towards Europe. Other
scholars point to the weakness of transnational financial lobbying over Brexit, highlight-
ing a ‘battle of the systems’ as countries compete to lure financial services away from
London (Howarth and Qugalia, 2018; Lavery et al., 2019). James and Quaglia (2019,
2020) add that the UK’s decision to downgrade the importance of EU market access
reflects the City’s inability to translate its ‘latent’ structural power into instrumental
influence. This is attributed to several mediating factors, including domestic political
statecraft, institutional barriers to access and weak financial sector organisation. By con-
trast, Kalaitzake (2020) argues that the City has successfully leveraged the ‘structural
interdependence’ of financial markets to secure important commercial protections for
the City after Brexit. Similarly, Talani (2019) claims that financial firms have adapted
pragmatically to the challenges of Brexit, enabling London to potentially strengthen its
hegemonic position.
The article sets out to address this puzzle by generating new insights into the strengths
and limits of the City’s influence during the Brexit negotiations. Integrating theories of
discursive institutionalism (DI; Schmidt, 2008, 2010) and business power (Culpepper,
2012; Lindblom, 1977), we develop a framework for analysing the ‘discursive’ power of
finance. Exploring how financial actors (re)construct power through the development of
unifying discursive strategies, around which coalitions of heterogenous financial actors
engage in collective action, provides a more dynamic perspective of financial industry
influence over time. By applying this to a historical analysis of the City’s influence since
deregulation in the 1980s, we also aim to identify key conditions for the assertion of dis-
cursive financial power.
The discussion below shows how a key source of the City’s influence historically has
been its capacity to shape policies, political processes and public opinion through interac-
tive processes of discourse. Following financial liberalisation, this power rested on a
pervasive discourse about the City as a deregulated financial centre with lucrative access
to the EU single market. This narrative served to unify disparate parts of the financial
sector and was internalised by successive UK governments, necessitating minimal collec-
tive organisation. We argue that this power was challenged by the global financial crisis,
leading to a revised discursive strategy emphasising the contribution of finance to the
‘real’ economy, while opposing new regulatory burdens at the EU level.
Brexit poses a more serious challenge to the City’s discursive power for two reasons:
first, the UK’s withdrawal removes critical ideational constraints, expanding the
boundaries of acceptable discourse and feasible policy options regarding the City; and
second, divisions within the British state about the future relationship have undermined
the discursive co-production of financial power with policy makers. These factors
encouraged financial actors to re-interpret their perceived interests, contributing to a
fragmented discursive landscape that undermined the development of a coherent strate-
gic narrative about Brexit. Evidence for this is to be found in the fluid policy prefer-
ences of the City’s main representative bodies, framed around the ambiguous concept
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