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.
Then there is the housing market, near and dear to the hearts of both Americans and Brits, for many of whom a house is not a home but an investment, and for some of whom those investments are on both sides of the ocean. Americans take on huge mortgages to finance their investments in the tonier parts of London, and Brits buy condos in Florida. So Americans hope the Bank of England won’t raise interest rates, while condo-owning Brits hope high petrol prices won’t discourage Americans from motoring down to Florida to rent condos and provide the owners with the income to cover the carrying charges on their sun-drenched properties.

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