CITY AND SUBURBAN
Boycott a Japanese, win a Porsche not the City's kind of competition
CHRISTOPHER FILDES
If there is anyone in the City of London Who favours what the Government is now doing in the City's name, will that suppor- ter please stand up? I hear of nothing but dismay. Ministers threatening Japan with a trade war have chosen financial services as their battleground, proclaiming that Tokyo must let in more City firms or see Japanese firms sent home from London. Did they suppose that the City would respond with a great approving roar of financial national- ISul — breaking windows at the Bank of Tokyo, picketing the expensive but excel- lent sushi bar in Bow Lane, promoting competitions in City pages: 'Boycott a Japanese, win a Porsche'? If so they must be. disappointed. They have forgotten the City's insurers, and Lloyd's in particular, With no special interest in the opening up Uf the Tokyo stock market but every interest in good trading relations with Japan. Lloyd's brokers handle huge volumes of business for their Japanese customers. London banks and securities traders are no more eager to see the Japanese run out of town on grounds of reciprocity. They have watched the Swiss play the reciprocal card, saying that they would give exactly as many licences for Japanese banks in Switzerland as the number of licences given for Swiss banks in Japan. That is one reason why Zurich lost so much ground to London as an international financial centre, and why London has more banks, from more countries, than any- where else in the world. The City rightly sees this not as a sign of infiltration but as a source of strength — making it possible, for instance, for London to be the world's biggest market in foreign exchange. Nothing could be more complacent than to suppose that this market, or the Japanese banks, have nowhere else to go. One new option is the so-called 'Tokyo Offshore market', given legal status last Year as part of Japan's de-regulation. It means that the banks, if they want to move some of their international business, need not try their luck in Frankfurt or Amster- dam. They can simply take it back to Tokyo. They were in a jumpy mood before this flare-up, unsettled by the Budget, Which changed the tax-treatment of their lending. The City must now fear that its multifarious Japanese connection will suf- fer in the same way that a commercial connection suffers from a strike. Corn- panies are forced to look for new suppliers of goods and services, may like them better, and as a matter of prudence will spread their business to reduce their risks. It is an unwelcome prospect for the City, which — unlike, say, the aircraft industry — is not used to being helped by govern- ments.
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