CITY AND SUBURBAN
There's a future in Europe for Hong Kong West, says Crystal, who's Ed's smarter sister
CHRISTOPHER FILDES
Iam pleased to announce a timely addi- tion to my staff. I had been anxious to appoint a New Millennial Correspondent, and now Ed Balls, the recently appointed chief economic adviser to the Treasury, has been good enough to introduce me to his smarter sister, Crystal. Her first dispatch reaches me from fairly early in the forth- coming century:
The disastrous Helsinki summit of 1999 pointed the way to the future of Britain in Europe and, most of all, the City's future (Crystal Balls writes). Nothing could have seemed less likely at the time. The meeting had broken up in acrimony and disorder, with the usual suspect painted into the familiar corner. British beef stuck in French throats, and London's markets — every- thing from fine art through the art of the takeover to the international markets in money and capital — stuck in the throats of Europe's leaders and the European Com- mission. At the same time, their pet project, the euro, was ending an ignominious first year by plumbing new depths every day, and (what was even more hurtful) the awkward squad of City dealers in red braces had col- lared this market, too. This was no adver- tisement for the merits or the prospects of an ever-closer union, and Britain in Europe, the lobby-group set up to canvass for it, seemed to be coming apart before its spon- sors' eyes. It was at this point that Chris Pat- ten, Britain's new man in Brussels, had his brainwave. Put in charge of external affairs, he successfully pleaded for his directorate's scope to be extended to Britain. He had come on from a five-year stint as Governor of Hong Kong, where his mission was to hand over British sovereign territory to alien rule, amid a consensus that this was its manifest destiny. It could be done again, so he said, the Hong Kong way: one country, two systems.
North and south
A VISIT to Canary Wharf, followed by lunch in the City, had opened his eyes its well as his mouth (my correspondent explains). The place even looked like Hong Kong. This was another of the world's great offshore financial centres, off the shores of the Thames or the Channel, depending on the point of view. Its culture, its economy, its way of life, its seven-figure pay packets were poles apart from those prevailing in the country's hinterland. Tony Blair as Prime Minister had made a point of this, complaining that Britain suffered from a north-south divide. Mr Patten urged him to take advantage of it. North of the divide, he suggested, there would be support for join- ing Europe's dependency culture. Portugal and Greece were in all but name client states of Brussels, happy to have their hands in the common till, and although he had not been to the north for some time, he thought this might go down quite well there. The City, though, could work out where all the money came from. Together with its base in Roseland (the shorthand term for Rest Of the South-East) it would require special treatment. He proposed that it should be reclassified as Hong Kong West.
History starts here
HENCE (or so Crystal foretells) the epoch- making settlement, sealed when Tony Blair signed his name to the Treaty of Palermo. For the next half-century Hong Kong West would have special status within Europe: its own courts, its own taxes, its own currency, even its own chief executive — inevitably, Lord Marshall of Knightsbridge. Its foreign policy would be conducted by Mr Patten in Brussels, and elements of Europe's new Rapid Response Force would be billeted in London to keep order, but the internation- al bankers would scarcely notice the change. The Savoy, like the Mandarin, would still be open to them. So the all- important markets would stay where they were, greatly to Europe's benefit as well as Hong Kong West's. Protestors maintained that, on both sides of the border, these arrangements were less than democratic — but this, as Mr Patten argued, was inherent in the concept of an ever closer union, with power continually arrogated to the centre, and exercised by a commission and a cen- tral bank accountable to no one. You can't make omelettes, he joked, without regulat- ing eggs. We are making history, the Prime Minister said in Palermo, so how fortunate it is that when I came to power I abolished history. Now we can start again.
Counting the days
BACK in our own century, we can count the days to the first great investment opportunity of the new era, and thank Gor- don Brown for it. He has spent more than half this year bombing the price of gold, selling off our reserves to invest the pro- ceeds in the euro — not a great opportuni- ty, that one. When the year ends, he will mark the occasion by abolishing the Value Added Tax he levies on gold. So to hoard- ers and bargain-hunters, the price, already not too far above its lowest level for two decades, will have 17'/2 per cent knocked off the top of it. London is the world's biggest market for gold bullion, so you could stroll into New Court and place an order with Rothschilds, or simply leave a bid at the Bank of England's next auction. Gold Investments of Gracechurch Street in the City would sell you a kilo bar of gold for something like £5,850, or a Krugerrand (one ounce of gold) for about £183, of which all but the last £10 would represent the gold content. For the millennium the Royal Mint is striking a sovereign, and Spink's of St James's will have some in stock early next year for about £55. Any day now some likely lad will launch gold- brick.com and sell virtual gold over the Internet. He will make money this way (out of selling his shares) though I am less sure that his shareholders will. Just now the Internet stocks are a bright shining bubble, but nothing shines so brightly or so durably as gold.
Bill on London
A SEASONAL wave to my first City editor, Bill Clarke, whose classic handbook, How the City of London Works, has just popped out (from Sweet & Maxwell at £11) in its fifth edition. As with The Good Food Guide, the answers keep changing, so attempts to use out-of-date versions will lead to disappointment and indigestion, which shows what a far-sighted idea Bill had in the first place. The sixth edition will bring us up to date with Hong Kong West.
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