The Growth Of British Finance Meets A Scythe Called Brexit

The Big Bang created the London we know today. Brexit is likely to deflate it—and the U.K.

- Matthew A. Winkler

If you know anything about financial history, you know about the Big Bang deregulation of London’s financial markets. On Oct. 27, 1986, Prime Minister Margaret Thatcher blew apart the inert blob that was the stagnant postwar U.K. economy and its ailing banking system. That explosion helped make London synonymous with international finance, ignited a cultural and economic transformation in the U.K., and even helped bring down Soviet communism.

Now, two years after Britons voted to exit the European Union, it’s worth reflecting on not just how the Big Bang was detonated but also on the principles it represented. This wasn’t an immutable act of nature so much as a reversible act of financial engineering, and Brexit has become an agent of its undoing. The financial revolution Thatcher kicked off was a powerful expression of faith in the power of globalization to improve lives—a faith that’s been shaken in the era of Brexit and Donald Trump.

I remember what banking used to look like in the U.K. In 1982, when I began my London posting with the Wall Street Journal, bankers still came to work in bowler hats and repp ties (and never, ever brown shoes). To keep the dust down at the old London Stock Exchange at Capel Court, where jobbers traded equities face-to-face on a dirt floor, waiters sprinkled the ground with watering cans.

The parochialism that prevailed back then meant workdays were short and slow. Profit was a consideration, not a priority. Friendship or nepotism, not ability, usually determined who got a job. Arcane customs ensured that the sons of venerable firms such as Cazenove, Panmure Gordon, and Rowe & Pitman would have livelihoods just like their founding fathers.