Globalalization drove U.K. wealthAs the United Kingdom decided to leave the European Union in the referendum held on June 23, London would be the place most surprised by “Brexit”. The city of 8.6 million people makes up 22 percent of GDP. The capital region has a population of 22.7 million, with 30 percent of GDP.
The financial industry makes up 7.6 percent of GDP and 4 percent of employment and is centered on the city and Westminster. It is the financial hub of Europe and brain of global financial industry. There are twice more financial firms operating in London than in New York and Frankfurt.
Those working in finance come from more than 100 countries. They are one of the most elite groups, investing money around the world. From the royalties from the Middle Eastern petroleum producers to Russian oligarchies, they bring money to London to invest through them. London is an archetype city attracting money and talents.
There are more than 840,000 private companies operating in London, including the financial firms. According to American think tank Brookings Institution, London’s gross value added per capita is $162,200. The size of London’s economy is similar to that of Iran, the 29th largest economy in the world with a population of 80 million. It is not an exaggeration to credit London’s energy for the United Kingdom’s constantly superb economic performance since Margaret Thatcher. Currently, the United Kingdom is the fifth largest economy, with an estimated GDP of $2.849 trillion in 2015. In Europe, it is only second to Germany. Per-capital GDP is $43,770, and it is the 13th richest country in the world.
But it is undeniable that EU membership considerably contributed to the U.K.’s good report card. The economy of the United Kingdom became more vibrant as it could access the vast European market easily and pursue multilateral cooperation. Exports in 2014 were $503 billion, ninth largest in the world, and were concentrated on other EU members. Almost 11 percent of exports were to Germany, 8.1 percent to the Netherlands, 6.5 percent to France, 6.4 percent to Ireland and 4.5 percent to Belgium. The trade was boosted by geographical proximity and tariff exemptions.
Other driving forces for the U.K.’s prosperity were opening and globalization. Half of the owners of Premier League football teams are foreigners.
The clubs hire managers and sign players based on performance and talents, regardless of nationalities. The Premier League had the best sports games possible and became a symbol of successful globalization.
The rankings of the U.K.’s richest people also reflect globalization. In the Sunday Times Rich List 2016 released in April, The Sixth Duke of Westminster is the only one in the top 10 born in the United Kingdom, and his wealth mostly comes from the family estate in London that he inherited. Others are Indian, Swiss, Russian, Dutch and Swedish. The descendants of the founders of packaging company Tetra Pak and Dutch brewer Heineken reside in London. The United Kingdom attracts foreign billionaires as the foreign income is exempt from taxes, and the income tax is relatively low. The metropolitan area of London, where 60 percent of the residents come from other countries, also lures global businessmen and investors. London’s air seems to give freedom to anyone regardless of origin.
London has also been providing the most luxurious infrastructure and services to allow for the wealthy affluent lifestyle, offering mansions, jewelers, Michelin-starred restaurants and high-end boutiques. They can easily find the best-trained bodyguards from trustworthy security firms, high-performing investment companies to make them even richer, law firms to handle legal issues and PR companies to maintain their celebrity status. The service industry makes up 78 percent of the U.K.’s GDP. The rich and famous are attracted to London, and their presence makes the city richer. But the U.K.’s withdrawal from the EU would make London’s everything things of the past.
The British were tricked by some sweet-talking politicians urging them to decide the fate of the nation by themselves. The outcome could possibly be a historic lesson of choosing the path to ruin for itself. They took for granted that Britain’s prosperity was not solely achieved by the British alone. Putting interests of the country first would lead to exclusionism and isolation and won’t help the nation or the people. As the United States will elect the next president in November, and as Korea makes the choice next year, we need to keep in mind the lesson of the United Kingdom.
JoongAngIlbo, June 30, Page 28
*The author is an editorial writer of the JoongAng Ilbo.