Lord Mayor of the City of London, Alderman William Russell recently
spoke with Australian Investment Council Chief Executive Yasser El-Ansary via
video conference in a one-hour webinar watched by members all over the
country. They discussed the impact of COVID-19 on the UK economy, the
importance of free trade agreements and the Sydney-London Fintech
bridge.
“I don’t think the office is dead but I recognise that things will change
dramatically in the way we work in the future − hot-desking won’t be around
and the way that we collaborate will be different,” Alderman Russell said
from his office in London.
Alderman Russell sees less air travel and more virtual collaboration as
changes that will become permanent as a result of the current environment.
“During the COVID-19 lockdown we have seen that pitches are still happening
successfully, but with the current travel restrictions we are not having to
fly anywhere. These may be changes that stay when the recovery which I term
‘repositioned normality’ comes.”
Build Back Better – Positive changes around climate
Amongst other things, COVID-19 has highlighted the importance for economies
to be prepared for pandemics. Alderman Russell believes one of the positive
outcomes will be changes in policies and actions on climate change.
“Build Back Better
is the phrase we are using in the UK,” he says. “COVID has focused all of
our minds on what happens next, and it is going to be climate change. We
have to go about it now before it’s too late.
“HRH Prince Charles and David Attenborough have been warning us about
climate change for years. Now it’s time to listen to the scientists about
climate change.”
In the UK, green is top of mind with a huge amount of infrastructure and
clean energy projects underway. Superannuation and sovereign wealth funds
in the Gulf States have taken a keen interest in this area and the UK
Government is focused on moving quickly on Infrastructure through increased
investment and fast-tracking projects.
“Australia plays an important position in the pecking order but is not part
of the leading group of nations on green finance,” Alderman Russell said.
He said Temasek in Singapore had set a very high benchmark in where they
will be investing their money and that large shareholders can drive the
process of change.
“Asset managers need to recognise they are in a hugely powerful position to
effect change around the green agenda.
“We talk about the transition. If we see that investment managers are
working on a transition to get to a green place then that is part of the
process. By remaining invested we can bring about change from within.
That’s the transition bit – you remain invested because the company is
committed to transition. If the company is not making that transition it is
difficult to remain invested and that will make it difficult for the
company to raise capital and grow.
“A firm like KKR will look at the sustainability of the company. If it
isn’t sustainable no one will invest in it on the stock exchange. And we
have seen huge returns being made with ESG stocks outperforming other
shares over 1, 2, 3, 5 and 10 years.”
Fintech and Financial Services
As spokesperson on financial and professional services, Alderman William
Russell is the 692nd Lord Mayor of the City of London and stands
alongside Sir William Cubitt and Sir Richard Whittington as one of three
lord mayors since the role was inaugurated in 1189 to have a tenure of more
than one year.
“My focus is very much on financial and professional services. This is
where Australia and the UK have a lot in common.”
As a world leader in fintech, there are lessons to be learned from the UK
Fintech and innovation economy.
Alderman Russell says Australian companies that use the Fintech Bridge
between Australia and the UK will learn a great deal from the ecosystem
which has become UK-wide in places like Leeds, and Londonderry. He also
cites the regulator, which has a strong consumer focus as key to the
sector’s success.
The UK will continue to consolidate its position as a world leader in
Fintech. It recently announced a review on how the Role of the Fintech
sector can help the UK economy in terms of COVID and Brexit. The report on
the inquiry is due to be released by the end of the year.
Brexit
Alderman Russell is confident a Brexit deal will be signed between now and
31 December which will provide much needed certainty for the UK economy.
“I’m sure the downturn in the UK stockmarket is waiting to see the
outcome.” Although, he says in reflection, the banks aren’t going anywhere
and he believes the 85,000 jobs that were estimated to be lost as a result
of Brexit would be closer to 5,000 and that jobs have grown in areas like
Fintech and green finance.
Now we are leaving the EU we can change our trading relationship
dramatically.
The UK is progressing its Free Trade Agreement with Australia and is
building closer trading ties with nations like Japan and Singapore. The
first agreement is expected to be signed with Japan by the end of July.
The outlook
Overall, the UK is well positioned for Brexit and COVID-19.
The UK has a vibrant ecosystem and a favourable time zone for attracting
talent and businesses and investment has been with strong with 1.79 billion
pounds in investment capital in 2018.
There is government support for start-ups and early stage businesses
through the Enterprise Investment Scheme which offers tax breaks for
investment and successful business outcomes.
During Covid-19 the Future Fund was created to support innovation and to
ensure the pipeline of new businesses and innovation continues.
And, a last word on Brexit: “We have until December 31st. I’m an
optimist. Like all of these things, the deal will probably be at the last
hour on December 31st.”