THE SOUND OF SILENCE: EXPLAINING THE CITY OF LONDON’S (IN)ACTION DURING THE BREXIT CAMPAIGN

Abstract

The purpose of this thesis is to explain why the City of London, the heart of the United Kingdom’s finance industry, seemed inactive in the 2016 EU “Brexit” referendum campaign. Given the City’s status as the largest and most competitive industry in the UK, its apparent inaction is a puzzle. I develop and explore three hypotheses to explain this conundrum:

H1: In line with other elite members of British society who supported EU membership, the City underestimated the possibility of a Leave victory. H2: In light of its role in the global financial crisis and the rise of anti-elite sentiment, the City did not mobilize because it understood that the electorate did not share its interests. H3: The City secretly wanted to leave the EU.

By analyzing primary and secondary data in a qualitative process-tracing study, I find that the inaction of the City is explained jointly by H1 and H2. The City strongly favored Remain but refrained from an explicit campaign because it understood that the electorate did not share its interests. With this in mind, it could have gone the extra mile and mobilized covertly. Yet the City stayed on the sidelines because it underestimated the possibility of a Leave victory. Being shunned by the government also played a part at both stages. Whilst the majority of the City wanted to stay in EU, they did not act on their intention. A minority of rebels bankrolled Leave, funding game-changing advertising campaigns and related activities that swayed Britain to vote for Brexit, giving H3 (although not in its entirety) a part to play. By analyzing the subject matter, I assess the current state of the UK finance industry, corporate power, campaign finance and London’s future as a global financial center.