Could Brexit end London’s financial dominance? | The Economist

Could Brexit end London’s financial dominance? | The Economist


Brexit It’s relentless The media coverage of Brexit is dominated by the… …twists and turns of daily politics Will we get a deal Brexit? Nobody knows the exact cost… …of risk around the Brexit deadline It’s drowning out a lot of important stories about the… …impact Brexit is set to have… …on Britain, Europe and the rest of the world We want to get to grips with one of those stories… …about what Brexit could mean for our financial systems Ok, so Brexit—a fast moving story Obviously everyone in this country has… …huge amounts of Brexit fatigue Most of the top regions that people are searching for Brexit… …and information around it… …most of them are in Europe There is big research done by the European Parliament… …called The Eurobarometer Most of the European countries don’t really want to know… …about bureaucratic decisions and the intricacies of politics They are all looking into business, trade… …and probably this is a subject that… …really interests people in Europe How is it actually going to work in terms of economy? To better understand what’s at stake here… …we spoke to Chris Lockwood… …The Economist’s Europe editor Well it seems to me there’s two sort of ends to it One is what the effects on Britain are going to be… …and the other is what the effects on Europe are going to be The effects on Britain and Europe are very different I mean the effects are going to be much more severe for Britain than Europe And that’s worth exploring because Britain has… …always tried to argue that they need us more than we need them… …which is obviously complete nonsense… …based on a complete misunderstanding… …of the way trade flows work But then you get into other difficult areas… …like surrounding the City of London Financial services, those aren’t trade barriers or they’re not goods… …but there you’re into whole regulatory problems where… …because we won’t be part of the single market anymore… …our banks will no longer be treated as being… …sort of equivalent to European banks And whereas in the past, if a European country tried to discriminate… …against our banks and not allow our banks access to bits of their market… …we could always sue in the European Court of Justice Now we won’t be able to Many cities can claim to dominate industries Silicon Valley in California, the centre of technology For electronics, head to Shenzhen in China The leading hub for outsourcing is Bangalore, India… …and London hosts one of the world’s largest international financial centres Tamzin Booth has been reporting on business and finance for a long time She’s The Economist’s Britain business editor Within just a square mile here on the banks of the Thames… …companies can do so many things A multinational can sell $5bn-worth of shares in 20 minutes… …a startup can raise seed capital… …from Asian pensioners A company can insure a pop star’s vocal cords… …or the risk of a hurricane hitting So how important are these services for other countries… …especially in Europe? Well relations between the City of London and Europe… …are particularly intimate French and Italian firms often go to London to meet investors… …or organise a takeover Some 90% of European interest-rate swaps… …are cleared through the City’s plumbing So the global economy is inextricably linked with London But Brexit threatens to undermine its global standing Since the Brexit referendum more than 300 financial firms… …have decided to relocate or set up shop elsewhere in Europe And soon thousands of workers from London… …will be crossing the Channel to staff new offices They are moving to multiple cities across Europe Dublin is set to be a hotspot for asset managers Frankfurt is the bankers’ favourite… …attracting 43% of bank moves from London And trading firms are likely to favour Amsterdam And for all of these cities, new business means new money By one estimate, £1trn in assets could leave Britain We wanted to find out how two European cities… …Amsterdam and Dublin… …have been honing their sales pitch to lure those assets away from London Hello Let me first say that… …we actually hate to see Britain leave the European Union So we are not very enthusiastic about that whole idea But in Amsterdam we have a very good digital infrastructure… …which is for instance, for fintech companies, very interesting In Dublin, we’ve been a European financial centre… …now for more than 30 years The fact that we’re close to London… …that we’re English speaking… …that we’re a common-law jurisdiction… …really appeals We have lots of internationally oriented talent Close to 90,000 people working in the industry… …both foreign and domestic in Ireland People speak many languages, which is attractive And we also have good accessibility… …in terms of Amsterdam is near the airport So what does this exodus mean for the future of Europe’s financial system? Research I’ve been reading from think-tank, New Financial… …concludes that Brexit will take the entire… …financial-services industry backwards Hello, how are you? Good, very well Over the past 20 years anything that can be moved… …to London has been moved to London because… …it’s so much more efficient for a large bank to run… …its operations in one financial centre and sell them across border… …sell them remotely to customers in the rest of the EU… …than it is to have… …15 offices with 15 separate management structures… …sprinkled and spread across Europe And what Brexit is doing, or at least in part… …is rewinding some of the progress that has been made… …rewinding that process over the past 20 years… …and forcing firms to shift more of their business back… …to the EU and have a stronger local presence So what is the future of London? When you look back over the history of London as a financial centre …you know it came to dominance because of its unique position… …as a global financial centre It helped fund the railway network in what’s now the United States… …far more so than it helped fund the railways… …in what’s now France and Germany So I think we’ll see London sort of moving back… …to perhaps its sort of… …its longer-term historical role… …of being a global international financial centre London currently ranks 2nd in the Global Financial Centres Index… …only after New York The highest euro-zone city is 15th on the list Cities like Frankfurt and Paris will be catching up with London post-Brexit… …but they probably won’t overtake And any gains they do make at London’s expense… …might prove to be a hollow victory… …as Tamzin explained Ultimately for the euro zone… …the costs of having a less efficient financial system… …and sort of higher cost of funding are really likely to outweigh… …the benefits of grabbing some bits of business from the City The annual bill for every 0.1 percentage-point… …increase in the cost of euro-zone firms’ funding equates to €32bn… …or 0.3% of the whole euro zone’s GDP How is the City of London going to navigate Brexit? Well the City could keep a lot of its access to the EU… …if it agreed to be largely regulated by it But British regulators rightly fear handing a lot of control to the bloc… …especially if the euro zone’s unspoken goal is to shrink… …the City of London and really boost Paris and Frankfurt So as countries across the EU start to weigh the… …financial consequences of Brexit… …what about the political conseqeunces? We’ve been exploring those too… …and they’re not necessarily what you might expect The people are slightly more optimistic now, than before So I think the Italians are trying to hope for a better future for the EU Obviously nothing is for granted… …we’ll still have to fight every centimetre… …of ground to actually defend the European Union But I feel there is a bit more optimism… …and that’s a good sign That was the founder of a new pan-European movement called Volt… …which features in another of our films… …exploring how the Brexit vote is changing the EU You can watch that film if you click on the link opposite The other link will take you to The Economist’s latest coverage on Brexit… …and also some of the data and research we used whilst making this film Don’t forget to subscribe for all of our latest releases… …and thanks for watching …other European countries view the EU I founded Volt because of Brexit… …Brexit was the first spark that told me… …that our European values were in danger I figured that something was needed… …to try to steer the direction that the UK… …but not only Europe as a whole was taking And so the idea of creating something European… …a European political movement We dream about a Europe that is more united… …more cohesive where countries are not left behind But Andrea has his work cut out for him That’s actually the start of another film… …which you can watch by clicking on the link opposite In it we explore how Brexit has had some surprising effects… …on anti-EU sentiment Click the other link if you want to look at… …The Economist’s latest writing on Brexit Thanks for watching… …and make sure to subscribe to get all our latest releases

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About the Author: Oren Garnes

100 Comments

  1. 7:30 i wonder where and how she came up with those statistics. in fact, based on that little clip, i don't even know what they mean.

  2. Who in their right mind would chose Frankfurt over Amsterdam? One city is ugly, full of crime and full of Germans, the other is beautiful and has cheap drugs. No offense to the Germans, I am German myself, but for fucks sake, if you can pick your destination, go anywhere in Europe but Germany.

  3. This fiasco called Brexit as put me out of a job the building trade as almost come to a standstill because of the uncertainty, not just me many more builders who will never recover from this mess.

  4. It is very polite of the Euros to say, "We hate to see you leave," but they seem very eager to assume the role that the Brits are so eager to relinquish.

  5. City of London : Has been under attack from European and US bodies for decades because of its control of Trusts and Offshore dealings. City of London is estimated to control over 40% of worlds finance via such shadow world. The report here as I see it – concentrates on the visible side of City of London financial business related to EU. It can only 'guess' at the larger more lucrative aspect of City of London dealings – which would be expected to continue virtually untouched.
    https://www.youtube.com/watch?v=np_ylvc8Zj8 … a documentary that gets as close to showing the 'real might' of the City of London. It is doubtful that Brexit will make much difference to this as 'The Spiders Web' is designed and operated specifically to be independent and global in its business.

  6. Square mile of London is technically separate from UK & EU. So financial centre won't change it's criminal activities.

  7. If we leave without a deal, could this, could that, could the other, perhaps this, perhaps that, perhaps the other, maybe this, maybe that, maybe the other……What are the could's, perhaps's, might's and maybe's, if we remain with a German dominated Federal United States of Europe ?. Are we so keen to be afraid to walk the streets at night for fear of JACKBOOT JURGUN shooting us on sight ?. Are we so keen to have an GESTAPO style police force demanding Identification from everyone as we go about our daily business ?. Have we so soon forgotten that we fought TWO WORLD WARS to prevent GERMANY from taking over Europe ?. Let's stop the conjecturing, and start dealing with known facts, and if known facts are hard to come by, then let's get out of the EU as voted for three years ago, start trading under WTO terms, AND THEN START TO NEGOTIATE WITH THE EU.

  8. " Could Brexit end London's financial dominance?" NO the way Brexit has been betrayed will end London's financial dominance what will also end it is the HUGE financial transaction tax the E.U. has put in the May/Johnson surrender treaty that will be collected by the H.M.R.C at British taxpayers expense and then sent directly to the E.U. .

  9. https://www.youtube.com/watch?v=CL_BFJJnd80&t=40s
    Just, no… The UK is still the one that googles it most. And it if this is not what you mean, and you really mean most of the countries that google `Brexit` most are European. Then yeah, thanks for that info Sherlock.
    https://trends.google.nl/trends/explore?q=Brexit

  10. TOTAL BS … financial issues are separate from trade arrangements … does America …Canada … Russia … etc etc have any issues with finciace …. NO… this is a total beat up … being part of the EU has nothing to do with financial arrangements

  11. The City of London’s financial dominance comes from the UK-controlled tax havens around the world. Note: “City of London”, not London itself.

    Those UK territory tax havens remain part of the UK, so almost nothing will change in the bigger picture.

  12. One Europe under one religion and law. Bit too many white people in this film and there needs to be some replacement done.

  13. Read the Lisbon treaty the money is going to Brussels in two years time with astronomical job losses thanks to our bygone prime ministers.

  14. This is exactly why we shouldn't sign up to any regulatory alignment: destroy the city and you'll get Singapore-on-Thames

    Let them leave. The EU will regulate it to death and they'll come crying soon enough

  15. The Houses of Parliament should be shut down and turned into a hotel for rich tourist and should be run by the people for the people and any money it makes goes into the country. A new parliament should be built a basic one, smack in the middle of the country somewhere in the Midlands. it should be a meeting house and have built in bedsits and a simple canteen for politicians that have to stay over. no luxuries like there is now. a politician should be classed as a working person not somebody that has special privileges. they stand for the local people that they are representing and speak for them not themselves. They work in the best interest of the country and its people not themselves. because they took the job for the sole purpose to make the country a better place for everyone to live in, not to better the quality of their own life.

    For being a politician, like a nurse or teacher should be calling, not because of the perks you get been a politician, it's time the gravy train was stopped for politicians..
    it's time we had normal people being politicians like you would have in a community system.

  16. I think what that Tamzin whatever person said at the end was rather typical of the British mindset. What would make any sane person conclude that the EU was trying to use Brexit to benefit certain cities? Brexit was a UK project done unto themselves. That some cities were seeing certain opportunities coming their way as well as problems and trying to make the most of them is only natural. That she was also so dismissive as to the eventual price that London might pay not being in the EU, just seemed more like wishful thinking and blind optimism. It certainly seemed to be in willful ignorance that London's current status was definitely tied to its relation within in the EU, and without that its role as a financial services provider would indeed deteriorate.

  17. The UK needs the EU more …? Eerrr, I don't think so Chris! We do need each other though, for sure. ( I stopped watching from that point).

  18. https://youtu.be/CL_BFJJnd80?t=367 moving business back to the EU,… says it all. The UK never considered itself being in the EU

  19. Brexit is just a large scale revolt by the british declining industrial belt..who r living on welfare..and look to the past

  20. nop because the UK economy is the most versatile and profitable in all Europe. Even with the brexit pressure and the EU pressure the british economy is still lot better than most of the EU economies including France and Italy.

  21. No it won't. I remember when the same experts said refusing to join the single currency would mean the end for London too. Singapore on Thames will do just fine.

  22. The EU is a protectionist cabal. EU tariffs & subsidies mean consumer goods prices are on average ~20% higher than they would be if all tariffs and subsidies on all goods & services were set to 0%. The UK can do this unilaterally if they leave and their civillian population will each net-benefit due to the drop in prices, even if no other country reciprocates, but I've not heard a single economist or commentator mention this.

  23. LONDON nor it’s financial position as a GLOBAL city will lose any grounds – another scare tactic by financial elitist that want to remain in the EU
    Just ask Greece about remaining in the EU? They would have simply been better having left, reinstated the Drachma, and traded outside of the EU as both Asian and American markets easily outstrip EU‘s trading power. Germany dominates the EU and that is not a Union now is it?

  24. Do I believe this? Yes! 90 colleagues of mine who worked in the midlands were made redundant in December 2016 and our jobs went to Frankfurt, Munich and Paris. Another company I worked for in 2018 many colleagues were made redundant and staff moved to Amsterdam and both companies said it was due to Brexit and uncertainty.

  25. Well you can get your guns back if you don't have brexit Ireland won't have two million black and brown and yellow people in their country on welfare by the rest of the country goes to shit. Not having brexit puts the UN at a disadvantage. And not having brexit you can have your prime minister killed I don't see anybody killing any corrupt people in Europe why is that exit is the Takeover of Europe in a soft coup or Islam takes over again what Islam will have access to the weapons the tanks the nuclear weapons and the extermination of the white European race and Donald Trump said we are not going to help Europe don't forget now America we don't need the help Europe they've been taken advantage of America too long you're not paying up the trillions of dollars for real you when you need to circle around and give that money back to America

  26. Always got the liberal People Talking Heads keep telling what the British people want out of Braxton they don't want it devoted 17 and a half million people to vote it out and now the parliament consider English people subjects that constitutional rights that's what's going on you are subject to a monarchy that is a German descent.

  27. News Flash….New York ranks fairly high as a financial center and is not in the EU…..nice bit of propaganda but, I’m not buying it. You do realize that if UK remains , the London Stock Market will be moved to Frankfurt by 2022, anyway……according to the Lisbon Treaty

  28. If this was likely, then the EU would have let us leave three years ago. The usual Remoaner project fear scaremongering. The woman actually says "what could happen". The whole programme was guided by a Remoaner, it's all about the worst case scenarios, no matter how unlikely they are.

  29. The Politicians failure to sort this out will see more and more companies running out of the UK. We need Brexit sorted quick for everybody. We need to move on and sort out the madness before there comes a tipping point where the damage cannot be repaired.

  30. The traitors in parliament who ignore the will of the people are scum and so are their institutions all the money lenders can f__k off with their talking England down i am done with parliament, police state headquaters.

  31. I get it, 1 trillion dollars is leaving the city of London but how much money has been flowing into it and how much is still remaining? That figure might just be a drop in the ocean compared to what’s remaining in the city and better yet still a significant amount for the common man but not these juggernauts…

  32. Economy this, economy that.
    YES, the economy is going to be bad after brexit. But believe it or not people don't care so much about the economy, they care more about their own personal wealth and whether they can have a say in their own country or not.

    Right now we are one of the world's biggest economies in the world and our people are suffering because of mismanagement. Whether the country earns a lot of money or not does not matter if the average joe can't keep up.

  33. So much scare mongering.. truth is.. we will all find out when it actually happens… at the moment it's just been nearly 4 years of guessing (from both sides) – still waiting for that "huge recession" we were meant to have though for voting leave.

  34. Bankers bankers bankers. Usury usury usury. Brexit is a step to developing a real economy as oppose to a transactional one. This is and improvment. It is better to be poorer and realer then wealthy off of fake loot.

  35. The opposite in fact! So here's the redpill timeline:
    2013: Cameron asked EU not to include UK offshore trusts in the EU-wide crackdown on tax avoidance. EU says 'NO'.
    2014-2015: Media narrative formed (Vote Leave)
    JANUARY 2016: 2019 EU Anti-Tax Avoidance Laws proposals PUBLISHED.
    FEBRUARY 2016: Cameron announces the Referendum to leave the EU.
    JUNE 2016: Referendum – Leave
    JULY 2016: 2019 EU Anti-Tax Avoidance Laws ACCEPTED by EU.
    Always follow the money…

  36. The economic problems are darkened to the viewer in the public..Totally unclear..The public perspective was to stop immigrants crossing the English channel into Britain..but the consequences involved was not originally spelled out for the public examination..British Economy will drastically dragged down by these unreasonable Brexit prepositions.. mass exodus of British intellectuals to Amsterdam or Germany even France are notably occurrence..We are no more in the Age of Empires or Colonial era where forces of superiority were inadvertently gallivanting in places they never belong

  37. No. They've set up regional offices or HQs in Europe. London is, and will continue to be, a main powerhouse for global trading.

  38. Absol;utely; there'll be nothing like living it up in the post cosmopolitan delights of Dusseldorf,or whatever, and having your children come home speaking German, or whatever. Not only the City of London but the great city of London itself just can compete-a no brainer.

  39. Brexit is fake.. you morons.

    You're being Genocided and replaced as defined by the UN itself, your hero Org..

    Wake up fools.

  40. The poor old man of europe. the united states of europe. Anglo shithole deserve all the hurt it's getting.
    You need us more than we need you.

  41. No, it wont.
    London is the world’s most important financial centre and it is global in scope. Its financial market is more than 10 times the size of Europe’s next largest, Frankfurt. There’s nowhere like it in Europe, nowhere even close. The largest centre for clearing Chinese currency is, guess where? Yep, London. Why? Because of the efficiency, connectedness, expertise and liquidity. Where is 50% of European corporate and sovereign debt underwritten? Yep, London. Why? For the same reasons. It’s the cheapest, most efficient place in the world to do it. The EU can try to force its companies and governments to dump London if they want but they won’t because if they do, they’ll have to rearrange finance at higher cost, leading in many cases, to bankruptcy.

  42. No one cares about globalism. It's a disease in humanity. Europe is not what it once was. Uno why? Because of neo liberal despots who have destroyed it, as for your question, no it will just go to other places in the world to do trade ect. It's not rocket science. Euro spaniels and left wing facists will be trying there hardest to splinter and cause problems. It's funny every one supports the snp Scottish [email protected] party but fuck Catalonia. The mind set of you euro spaniels is ashaming. Hold your heads down and wait for your masters to tell you what to do. There's many good reasons for brexit. People won't accept change or beleive in there countries. Hold your head low you worms. #soycialist Chanel

  43. Mrs Merkel herself said she was scared of UK as it would be competition. That's why she doesn't want anyone out of the EU where they have the upper hand in all EU countries by keeping them attach to Germany

  44. Well duh. UK companies were already moving to Amsterdam back when Brexit was first floated.. But it doesn't matter anyway, because these "cosmopolitan" business leaders will continue to line their pockets regardless.

  45. I'm still kinda hoping that London leaves the UK and joins the EU. It is already such a legally strange entity, it could totally make it as a city state.

  46. I recommend that everyone watch this interview with an ex-soviet diplomat and about “useful idiots” . This was filmed in 1984.A lot of what he says is true to about academia,media and moralistic values. https://youtu.be/y3qkf3bajd4

  47. What a load of bollox… i work in the city and it is booming the sheer number of new high rise buildings is staggering. new hotels restuarants ect. So a few banks will set up offices in Europe plenty seem to be investing big in london.
    I will go with what I see around me not this video.

  48. Future history students when looking back at the pre Brexit era will be amazed that London was once a world's financial hub like Paris.

  49. Funny how the UK's economy grew in the last 2 years and the EU is in a decline, UK's banks are stable compared to the EU's banks which are at the moment giving loans to people with no interest lol, EU's banks are getting payouts by the governments in the EU just printing money (that always works lol), investments in the UK are strong baby, no deal Brexit all the way and the UK can keep there 39 billion too

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