Thirty years ago today, the rules governing the London Stock Exchange changed, ushering in the “big bang” in the UK. The move was in part a response to concerns that London risked losing its pre-eminence in the world of finance to cities like New York.
The effect of the big bang was to strengthen London’s position as a financial centre. It also represented a key stepping stone in the trend away from manufacturing and toward services which had begun prior to 1970.*
Also thirty years ago, the fourth instalment of the Star Trek film franchise: The Voyage Home was released in the US. In it, the crew of the enterprise turn back from engaging with the rest of the universe and return to focus on domestic issues, going back in time as they do so.
Parallels of this plot with the UK’s Brexit vote in 2016 will depend on one’s political views, but today also saw the first GDP release covering a full quarter since the referendum. It illustrated the importance to the economy that services now play. The positive surprise in growth was entirely due to the service sector.
A particular area of strength was the continued growth in consumer focused industries such as films, retail and computer, including strong ticket sales for summer blockbusters. Some have pointed to the latest Star Trek film as a factor in this.
This would be spurious. As the ONS themselves point out, motion picture and TV production account for only 0.6% of the whole economy and served to increase GDP by 0.1%. Unfortunately for Star Trek fans, data suggests that Star Trek Beyond is not even in the top five grossing films launched in the third quarter.
So the latest Star Trek film is not responsible for holding up the UK economy since Brexit after all. However, the fact that it is being talked about at all only illustrates how things have changed since the City of London went off to explore brave new worlds in 1986.
*Though it is worth noting that according to OECD data, the percentage of value added by finance and insurance in the UK only grew from 5.5% to 7.2% between 1990 and 2015, a level which is the highest in the G7 but lower than both Australia and China, not to mention Luxembourg and Switzerland.
The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.