As a country’s financial sector turns away from wealth creation towards wealth extraction, this has geographical implications. In the UK’s case, this means that wealthy parts of London, far from being the engine of the British economy, tends to suck wealth from the regions.
Large financial centres and clusters can suck human and financial capital, creating over-development, property and housing distortions, space limitations, overcrowding and infrastructure pressures, while other areas suffer from underdevelopment.
See, for example, this Finance Curse article in The Guardian (2018).
Brexit and the Future of UK Capitalism
Martin Sandbu, Political Quarterly, Feb 2019.
Martin Sandbu, a leading Financial Times writer, makes a persuasive case that Britain is suffering from a finance curse (albeit without explicitly using the term.) He looks at the different possible “flavours” of Brexit that may come to pass, and assesses how each might impact Britain’s dominant finance-cursed economic model, concluding that a “hard Brexit” would likely accentuate the problems.