Donors of funds in London’s financial district (known as the City), have slashed their contributions to the Conservative party this year, as confusion around Brexit angers both its europhile and eurosceptic benefactors. Financiers have agonised for months over the government’s handling of Brexit negotiations and the damage it could do to the City, but their pleas have been ignored.
A year into the negotiations to leave the European Union, the top donors of the City have very substantially reduced the funds compared to 2017. The 20 largest donors in the financial district contributed 74 per cent less collectively to the party in the first six months of 2018 than they did during the same period last year, and 30 per cent less than they did in the first six months of 2016.
One senior policy adviser familiar with the donors’ thinking said that historically pro-Conservative benefactors in the financial services sector were now fed up with the ruling party. He said: “On the anti-Brexit side they are fed up with the government’s anti-business stance and for those who voted leave they feel Prime Minister Theresa May is botching Brexit. That’s hitting donations on both fronts.”
Total donations to the Tory party have dropped more than £23 million from 2017 with £4.9 million collected in the first six months of 2018. That is half the total gifted to the party over the same period in 2011. Unlike 2016, when the parties tapped donors to support Brexit related campaigning, or 2017, when a snap election prompted urgent calls for funding to fight Jeremy Corbyn’s Labour party, 2018 has not seen parties engaging in such energetic fundraising.
It’s a matter of great concern to the Conservatives that donations have dropped so substantially. To mention just a few, Egerton Capital’s contribution dropped from more than £1m last year to £125,000 this year, CQS donated £310,313 in 2017 and only £10,000 in 2018 while Caxton Associates’ fell from £275,000 to £83,710 this year. Donation to the pro-European Liberal Democrat party have jumped by a factor of 20 in 2018 to June 24, as compared to last year. Overall contributions to Labour, dropped over the same period by around 80 per cent.
Professor of politics at Queen Mary, University of London, Tim Bale, said the decline in donations to the Conservative party could be seen as “a signal to those at the top” of City’s chiefs’ disenchantment with a government that does not defend financial services’ economic interests. He likened the money given to the Conservative party by the City to “an insurance premium against the risk of a government doing something stupid.”
Bale added that in that context, “right now it doesn’t seem particularly good value” to donate. He said: “You might as well be insuring yourself against fire with a proven arsonist.” Bosses at businesses with UK manufacturing operations such as Airbus and BMW, as well as several financial services companies, have become increasingly disparaging in recent weeks about what they see as the government’s economically-damaging approach to Brexit talks.
London Mayor, Sadiq Khan warned that the government could “seriously damage” the UK economy by pursuing a Brexit that neglects the needs of financial and professional services companies. Supporters of Brexit, meanwhile, fear the continuing lack of consensus among government ministers as to their preferred divorce terms in exit talks is frustrating UK negotiators’ efforts to secure an economically-beneficial split from the bloc.
Before the White Paper on Brexit was published last week — it hasn’t helped to bring agreement among the party members, in fact, reactions to it from the divided Tory members as well as the opposition party is still emerging — Azad Zangana, a senior European economist at fund manager Schroders, said earlier this month that “the big question over the future relationship with the UK’s biggest trading partner remain unanswered” two years on from the UK’s vote for Brexit.
He added that the “complex nature of negotiations, the divisions in the government and opposition in parliament” all highlighted the “immensely difficult and potentially impossible task” that Theresa May will face in keeping “all sides happy” in the lead up to the exit in 2019. That uncertainty has seen some of finance’s largest benefactors cut their donations to the party this year to a fraction of their contributions in past years.
By Andy Jalil our foreign correspondent based in the UK. He can be reached at andyjalil@aol