Ghana has welcomed an historic apology from Pope Francis for the Catholic Church’s role in the transatlantic slave trade, a move that has reignited debate about Britain’s own colonial past and its lingering financial obligations. For markets, this is not merely a moral gesture; it is a reminder that historical liabilities can become present-day fiscal headaches.
The Pope’s admission, delivered during a meeting with African bishops, acknowledged that “many Christians and Catholics did not oppose the horrors of slavery, and even perpetrated it.” In Accra, President Nana Akufo-Addo called the apology a “significant step towards healing,” but also hinted that the conversation about reparations is far from over. Investors, however, should watch the currency markets: any serious reparation discussions would spook the cedi, which is already under pressure from high inflation and widening fiscal deficits.
This brings us to the UK. While Whitehall has no direct link to the Vatican’s apology, the news has resurrected calls for Britain to reckon with its own colonial exploitation. The Labour Party, under Sir Keir Starmer, has signalled openness to a “national conversation” on the legacy of empire. But conversations cost nothing; actual compensation would require a Chancellor to find billions in a budget already stretched by NHS waiting lists and defence spending. Gilts, my friends, would not take kindly to that.
Let us be clear: we are not now, nor have ever been, in the business of moral judgement. This column deals in economic reality. And the economic reality is that any large fiscal transfer to former colonies would trigger capital flight, higher bond yields, and a weaker pound. The OBR would have to downgrade its growth forecasts, and the Bank of England would be forced to tighten policy further, choking off investment.
Proponents of reparations often cite the Caribbean’s Caricom Reparations Commission, which estimates the damage from slavery and colonialism at over $7 trillion. That is more than three times UK annual GDP. Even a fraction of that sum would dwarf the £35 billion or so spent on foreign aid each year. The arithmetic is unforgiving.
But the Ghanaian welcome of the papal apology is a reminder that the moral arc bends slowly. The UK has already apologised for the Amritsar massacre and the Bloody Sunday killings. Could a colonial slavery apology be next? Possibly. But as with the Vatican’s gesture, an apology without cash is cheap. And cheap is what the Treasury can afford right now.
In the meantime, watch gold prices. Whenever historical grievances resurface, investors pile into safe havens. And for good reason: the past always has a way of becoming a present-day liability.
