Irwin Stelzer

Britain is not America’s economic poodle

Irwin Stelzer argues that in trade and finance, Anglo–US relations are surprisingly well balanced

issue 30 September 2006

Irwin Stelzer argues that in trade and finance, Anglo–US relations are surprisingly well balanced

Britain’s ‘special relationship’ with America is not confined to foreign policy. In more ways than one, our economies are interconnected in special ways, with neither being the other’s ‘poodle’.

Start with finance, where Britain seems set to be the dominant partner, constraining American legislators who like to regulate by adopting rules, while their British counterparts prefer to lay out broad principles. Britain is forcing America to change. No other country has that power. Capital is mobile, and the City provides a deep, transparent and less expensive capital market, free of excessive regulation. So capital-seeking entrepreneurs are avoiding New York and flocking to London. So far this year, London leads the New York Stock Exchange by 59 to 17 in attracting new initial public offerings. Fear of the emerging British hegemon has Treasury secretary Hank Paulson pressuring Congress to roll back some of the regulations that so offend international entrepreneurs, and New York mayor Mike Bloomberg shelling out £316,000 for a consultant to tell him how to win back this business, and the tax revenues that come with it.

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