When I joined the FT group in the early 1990s, my first foreign assignment was to head to Luxembourg, to write about a fledgling finance centre which was starting to make a name for itself as a hub for the distribution of Ucits mutual funds across borders.
I had only just started the job, a hapless young journalist in my twenties, who nearly missed the plane, not really used to travelling abroad or wearing a suit, and one of the first interviews I was told to conduct was with a suave finance minister called Jean-Claude Juncker.
As I remember the short encounter, I was not really given the chance to ask any questions. Instead, as an apparent representative of the UK, I was repeatedly berated for the “unhelpful” acts of Her Majesty’s government – for calling elections at the wrong time, when it was not convenient for European partners, for economic policies which went against the European norm and most of all, for the UK not being a true European player – for being half in and half out of Europe. I began to feel this weight of responsibility. But the words of Mr Juncker have been ringing in my ears ever since.
Little did I know that this minister from one of Europe’s smallest countries would one day be shaping the continent’s political and economic future, and the central role he would play in modern history and helping negotiate the UK’s direction too.
But there was one thing I did realise at the time: that something was happening in Luxembourg. The cranes and the building sites between the airport and the city centre could not lie. The numbers told a story too and the early movers such as Fleming were soon joined by rival groups who wanted to headquarter funds in the Grand Duchy.
Not only did this help democratise fund management – with Ucits bringing institutional investment techniques to the citizens of Europe – but the city became a brand, a Kitemark for quality and home for funds which could be distributed not just across Europe, but much further afield in Asia and Latin America.
Today, there is still much goodwill in Luxembourg towards the UK – as there is in nearly every other European financial centre. They are all desperate not just for a deal, but for the UK to remain within the European family. This is not purely about enhancing and building on existing trade and marketing of financial services and products; it is also about maintaining peace through economic links.
I recently had the privilege of chairing the annual cross border distribution conference, which the FT hosts each year in Luxembourg, together with local partners Deloitte and Elvinger Hoss Prussen. The participants included major fund house M&G, forced to change its business model and allocate massive resources to Luxembourg, due to Brexit. It was clear from the vast majority of high-ranking business leaders and politicians from across Europe that were present – including the first president of the European Council Herman van Rompuy – that they would move heaven and earth to keep the UK in Europe. Emotions were running high.
The position of a small handful of hard Brexiters in the audience, who had flown in from the UK for the debate, was treated with the type of disappointment and exasperation family members feel when one of their number temporarily goes off the rails. The overwhelming sentiment was that the UK will eventually be welcomed back to become a full member of the EU.
If today’s generation of politicians is incapable of achieving this outcome, then there is hope for and much greater faith in the next generation of leaders. When it comes to Europe’s success as a single market for financial services, Luxembourg has played a central role and will continue to do so. Currently there is much uncertainty about whether and how financial products and services sourced in the UK can be marketed throughout Europe after Brexit. But Luxembourg’s practitioners – and those in surrounding countries – hope that the UK’s financial acumen and expertise will always remain a key part of the European investment ecosystem.
Yuri Bender is editor-in-chief of Professional Wealth Management. Follow him on Twitter @YuriBender
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