Chief EU Negotiator Michel Barnier. Photo: Ye Pingfan/Xinhua News Agency/PA Images

A great deal of the economic commentary about Brexit remains focused on the immediate future. But the key economic question relates to the longer term. How well will Britain’s economy adapt to rapid changes and the innovations of the future?

There are of course influential people who do not like to see capitalism being innovative, in ways that can be hard to control. It is this comfort blanket view of the world which surely lies behind MIFID II, the latest regulatory fest from the European Commission, which started to come into force at the beginning of this year.

The Markets in Financial Instruments Directive II is designed to offer greater protection to investors. At least seven years in the making, it already runs to several thousand pages of regulatory requirements. In this mind set, bureaucracy and rules can eliminate risk.

But it is so complicated that it is virtually beyond the powers of a human to grasp. Certainly, experts like Phil Treleaven at UCL who have shone the light of AI on it believe that it is riddled with contradictions.

Here, in contrast, is an example of what is going on in the rest of the world.

Paytm is an Indian e-payments and e-commerce brand which has been around since 2010. At the end of last year, the company announced that it will “create the world’s largest digital bank with 500m accounts, envisioning an online financial services provider of everything from wealth management to credit cards and stock market trading.” The company is backed financially by Alibaba, the giant Chinese internet company. They have the money to match their ambition.

This news snippet shows how rapidly the world is changing. Banks established in the west for many decades or even centuries may suddenly find themselves facing serious competition from companies which virtually no one here has heard of.

In my view, we are living through a period of rapid evolutionary change. The London to Edinburgh stagecoach was perhaps the world’s premier service in 1830, covering the journey in just 39 hours. By the 1840s, it had been driven out of business by the revolutionary technology of railways. Right now, in just the same way, established companies in many sectors will find themselves made extinct by unanticipated innovation.

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