Interview, Fireside Chat
Could Brexit end London's financial dominance?
- The Brexit agreement is predicted to impose more severe consequences on the UK than on the EU, with British banks losing single market equivalence and the ability to litigate at the European Court of Justice.
- Thousands of London-based workers are expected to relocate to establish new offices in European cities, with Dublin identified as a hotspot for asset managers, Frankfurt anticipated to attract 43% of banking moves, and Amsterdam favored by trading firms.
- An estimate suggests £1 trillion in assets could exit Britain, forcing firms to shift business to the EU to secure local presence and potentially allowing London to revert to its historical role as a global financial center while Frankfurt and Paris catch up without overtaking it.
- The broader financial services industry may regress due to a less efficient system, with rising Eurozone funding costs potentially offsetting any gains from London; specifically, a 0.1 percentage point increase in funding costs is projected to cost the Eurozone €32 billion annually, representing 0.3% of its GDP.
- Tension exists between the potential for London to retain EU access by adopting EU regulation and British regulators' reluctance to cede control, amidst an unspoken EU objective to shrink London's dominance while boosting Paris and Frankfurt.
- Despite a slight increase in optimism regarding the EU's future, the bloc's trajectory remains uncertain, with defenders anticipated to face continuous challenges in securing its future.