Everyone knows that London became a financial centre in Victorian times because we had an empire, sea power, the first industrial revolution, colonies to export to and sterling to recycle. It followed the usual pattern of history where financial centres are part of the dominant economy of the day.
What people don’t think about is how this strength continued, even when the UK was a basket case economically.
Two world wars toppled sterling from its perch. America became the dominant country; the dollar the dominant currency. The UK economy plummeted out of the Premier League.
By rights the financial centre should also have withered away, just as Venice and Amsterdam did when their empires declined. Instead, the City held on. As such it is the centre that survived the decline of the economy from which it had grown.
The question is, with a hard Brexit looking ever more likely, whether it can do it again.
There were three reasons why it happened the first time: people, regulation and money.
The UK had an open-door policy. It did not matter where you came from; what religion you were; what business you were in, provided it was legal. All were welcome. That is how the Barings, the Rothschilds, the Schroders and the Warburgs all came to the City.
The UK had regulation for domestic retail entities such as banks and insurance but there was virtually nothing overseas. The Bank of England kept an eye on things up to a point, but basically it was caveat emptor. It meant that the City became innovative. There was little regulation to inhibit it.
And sterling? Financial centres fade away when their currency is no longer the one of choice in the world. But ingeniously, Britain got round this by using other people’s money.
The eurodollar market was the key. It helped that the US decided to cap interest rates on domestic dollar deposits in 1961 because that created a surplus of dollars in London. But it was the City that took those dollars and lent them.
The dollar was first but then came the Deutschmark, the Japanese yen and many others. Today it is the euro and, increasingly, the renminbi.
So the issue is what happens now with Brexit, where once again the UK might be cut adrift. How many of those freedoms are still there? How many will exist in the future? What if anything will be put in its place?
It does not look good. Migration is an issue. The UK appears to think migration is a bargaining chip for trade deals, where people will come if the country has a deal, but not otherwise.
Workplace visas are a poor substitute. They are costly, they take time, but most of all, if someone leaves their job they have to return home. The idea of moving from one job to another in London will be unlikely.
The asset management industry for example employs 37,000 in the UK. The London School of Economics reckons that 17,000 jobs could be shed here.
Currently, large numbers of non-British people work in finance. The chances are that there will be far fewer as time goes on. Regulation is now pervasive, but will it be the same in future?
Short-term, according to the Financial Conduct Authority (FCA), everything will stay in place. But there is a disconnect in the medium term with staying aligned with Europe, which the FCA wants, and thinking the UK should be utterly free to do want it wants, which Brexiteers favour.
Also the FCA is not engaging with European regulators. European firms and clients have been welcomed at this end, but there is no reciprocity.
The EU regulators have been told simply to treat the City as a third country, for the moment.
That may change — but only if the EU changes, which is unlikely. The EU is a rules-based organisation even if the UK does not seem to accept that.
Finally, currencies. It is highly likely in a hard Brexit that euro clearing will go to one of the EU countries for prudential reasons, even if it is not a victim of an opportunist land grab.
What happens to the renminbi thereafter is a moot point. The Chinese are unlikely to favour the UK if it is not part of the EU landscape.
There has to be a realistic possibility for the City to go into decline — not immediately, but over time.
Paul Woolley of the London School of Economics once said that UK finance could be cut by two-thirds without hitting much that matters.
We may yet see if he is right.