Edition: International | Greek
MENU

Home » Europe

UK finance reigns in Europe despite Brexit fallout

One year after Britain’s formal exit from the European Union, London’s powerful City financial sector still reigns on the continent despite losing key business and bankers to rival hubs

By: EBR - Posted: Wednesday, January 12, 2022

“Leaving the EU brings challenges, and there are threats from Paris, Brussels, Frankfurt and Amsterdam.”
“Leaving the EU brings challenges, and there are threats from Paris, Brussels, Frankfurt and Amsterdam.”

One year after Britain’s formal exit from the European Union, London’s powerful City financial sector still reigns on the continent despite losing key business and bankers to rival hubs.

“London has spent hundreds of years as a global financial centre. Brexit will not change that, certainly not anytime soon,” said Lee Wild, head of equity strategy at Interactive Investor.

The City, whose skyscraper offices are largely deserted by COVID restrictions, has yet to strike a post-Brexit deal with Brussels on equivalence, which would allow London-based firms to fully operate in Europe.

Over the past year, London has lost out to rivals on equity trading, struggling to recover ground after a hammering triggered immediately after Britain’s EU exit.

Trading on London’s stock market slumped by about 40 per cent at the start of 2021, with London prevented from offering EU-listed shares to clients outside the United Kingdom.

Amsterdam has benefitted the most, overtaking London to become Europe’s biggest hub in terms of equity trading volumes for much of the past year, according to Cboe Global Markets.

London remains the world’s second-biggest financial centre behind New York when various factors are taken into account, including infrastructure, reputation and business environment, according to the Global Financial Centres Index 2021.

The City also remains a dominant financial centre on a global scale in several markets, including foreign exchange and derivatives.

“Leaving the EU brings challenges, and there are threats from Paris, Brussels, Frankfurt and Amsterdam,” Wild told AFP.

“But the likelihood that European rivals will wrest the crown of Europe’s primary finance hub from the UK is slim.”

The City can maintain a strong standing in the world of finance also thanks to a large network of support services.

“London still has a huge amount in its favour,” said Russ Mould, investment director at AJ Bell.

He said the City offered “an ecosystem of banks, advisers, lawyers, fund managers and hedge funds… (providing) appropriately-priced capital to companies who need it so they can invest, innovate, grow and create jobs”.

No staff exodus

Nevertheless, in the wake of Brexit, about 44 per cent of UK-based financial services firms have moved or plan to move operations or staff to the European Union, according to financial group EY.

Asset transfers totalled £1.3 billion ($1.8 billion, 1.6 billion euros) at the end of last year, it added.

Dublin and Luxembourg are home to the biggest amount of office moves, while Paris has won the most staff switches.

French President Emmanuel Macron in June inaugurated the Paris premises for several hundred JP Morgan Chase traders switching from London.

According to EY, the British capital has lost only about 7,400 financial roles.

That is seen as a drop in the ocean, with the UK financial sector employing more than one million people, 400,000 of which are based in London.

Recruitment consultants said that while the pandemic had contributed to limiting the movement, a future exodus of staff from London to the European Union remained unlikely.

“London continues to be an attractive destination for business investment and finance professionals alike,” said Hakan Enver, managing director at Morgan McKinley.

“To date, we are yet to see an exodus due to Brexit, and it’s now unlikely that will ever happen,” he told AFP.

London’s financial attractiveness was last year highlighted by a record number of companies making their stock market debut.

There were 122 initial public offerings — the highest amount since 2007 — for a total market capitalisation of £16.8 billion.

There was, however, in 2021 also a record IPO showing by the Euronext, whose exchanges include the Paris and Amsterdam stock markets and others across Europe.

“The real risk (for London) is not a ‘big bang’, but a slow deflation as activity moves to other centres, most probably in the US or Asia, and this only if the UK fails to respond to competitive pressures from other global financial centres,” said Jack Neill-Hall of financial sector lobby group TheCityUK.

*first published in: www.euractiv.com

READ ALSO

EU Actually

Moving towards an ever-closer European Union?

N. Peter KramerBy: N. Peter Kramer

The ‘Conference on the Future of Europe (please read: European Union!)’ has had his closing event. The purpose of the Conference was to engage citizens in a broad debate on the future of the EU

View 04/2021 2021 Digital edition

Magazine

Current Issue

04/2021 2021

View past issues
Subscribe
Advertise
Digital edition

Europe

EU study: CAP support for ‘couch’ farmers negatively impacts farm communities

EU study: CAP support for ‘couch’ farmers negatively impacts farm communities

Common Agricultural Policy support for landowners not actively engaged in farming has indirectly negatively impacted farming communities, at the same time as the EU continues to haemorrhage farms at an alarming rate, a new EU study has found

Business

How digitalization of industries can empower humanity

How digitalization of industries can empower humanity

5G can play a pivotal role in transforming industries to be more flexible, productive and sustainable

MARKET INDICES

Powered by Investing.com
All contents © Copyright EMG Strategic Consulting Ltd. 1997-2022. All Rights Reserved   |   Home Page  |   Disclaimer  |   Website by Theratron