More than one writer has compared London’s financial sector to the Indonesian Upas tree whose wide branches produce a toxic sap (Who are you thinking of right now?) which kills off any other plants growing near and sharing its supply of nutrients.
Here are two extracts from ‘The upas tree: the over-development of London and the under-development of Britain’ by Jeffrey Henderson and Suet Ying Ho:
‘The problem with Britain is that it is dominated by a single city: London. In other countries with highly developed economies and societies, political, cultural and economic power is dispersed: think, for instance, of Frankfurt, Hamburg, Munich and Berlin; New York, Chicago, Los Angeles and Washington DC; Toronto, Ottawa, Montreal and Vancouver; Milan, Turin and Rome.’
‘[Using] the Indonesian upas tree to symbolise London’s relation to Britain. The upas tree is a plant whose widespread branches produce a toxic sap that kills off anything that attempts to grow beneath them. London, historically but especially today, seems to have acted like the upas in respect to the rest of the country. Economically, politically, socially and culturally, London has become grossly over-developed and a consequence of its development process has been the systematic under-development of the rest of Britain.’
The upas-tree effect is the sucking of human talent and capital investment, on especially, infrastructure like roads, rail and communications networks, from the regions, leading to underdevelopment in these regions. Making the effect even worse in the UK than elsewhere is the unusual centralisation around a single mega city with a huge financial sector.
On finance sectors, researchers at Sheffield University, have suggested, dramatically:
We all need finance, but only up to a point. Once a financial centre grows above its useful size and roles, it starts to become predatory and harms the economy that hosts it. This happens in many ways. An oversized City drains our best educated and most talented people out of manufacturing and other economic sectors, generates large economic distortions and financial crises, and many of its members focus on devising ever more creative ways to extract wealth from other parts of the economy (see RBS footnote)…..UK has suffered a £4.5 trillion cumulative cost in lost economic output from 1995-2015 – and counting. That is equivalent to a £170,000 loss per British household.’
The consequences for the English regions can be seen graphically here:
Figure 2: Public expenditure on economic affairs per head of population by region, 2011-12
Figure 3: Public expenditure on transport per head of population by region, 2011-12
Readers might find graphs with Scotland included.
Finally, are their lessons for Scotland as Edinburgh booms?
Footnote: ‘The allegations first surfaced in 2013 when Lawrence Tomlinson, a businessman who was an adviser to the then business secretary, Sir Vince Cable, compiled a dossier alleging the bank [RBS] deliberately wrecked small businesses to make profits.’
2 thoughts on “How London’s bloated financial sector sucks the lifeblood of the Scottish and rUK economy”