Brexit or Not, London Loses Financial Centre Role

♠ Posted by Emmanuel in , at 2/10/2019 04:24:00 PM
This place used to compete with New York as the world's financial capital. No more.
I used to snicker whenever CNBC used to announce that it was broadcasting from New York, the "financial capital of the world."  In many respects, London held that honor well into the 21st century despite the United Kingdom long, long ago ceding global influence to the United States. Last year, the Global Centre Financial Index (GCFI) ranked New York ever-so-slightly ahead of London, with the rest of the pack catching up on these two.

If the end of Rule Britannia did not end London's role as the world's capital for finance, the 2016 referendum aftermath's result to leave the European Union has put paid to that status for good. You see, most of haute finance's titans circa 2019 are not sticking around to see the end of the sorry Brexit melodrama. They've had it and are packing their bags for continental Europe which is, er, actually still part of the European Union:
The world’s biggest investment banks will not reverse plans to shift billions of dollars and thousands of jobs out of the UK even if Britain ends up staying in the European Union, senior bank executives and people with knowledge of the plans revealed to Financial News.

In a big blow to the City, at least eight of the largest investment banks in London, including Bank of America Merrill Lynch, Citigroup, Goldman Sachs and JPMorgan, have said they will shift a significant proportion of their operations to Europe irrespective of the outcome of Brexit.

The move would harm the City of London’s status as a global financial centre. Banks are already preparing to move hundreds of billions of dollars from London to the continent after Brexit. Deutsche Bank is reportedly set to shift €400bn from its balance sheet to Frankfurt, while JPMorgan will move €200bn to the German city.
The marginalization of London will continue whatever the endgame for Brexit since, having already decided, banks will not be coming back whatever happens. What's more, hiring will more often occur where they will be in the future, i.e., continental Europe:
Longer term, bank executives say Brexit will change the way they recruit staff. “London would have been the natural choice to hire new bankers. Now, after the investment we’ve made in Europe, if someone leaves in the UK or we want to recruit someone, we’re just as likely to base them in Frankfurt or Paris,” said one European chief executive of a US investment bank.

Banks are unlikely to move people back in the event Brexit is overturned, said Jenni Hibbert, global practice managing partner at Heidrick & Struggles Financial Services, the recruiter. “If they do, it won’t happen overnight”, given the cost and effort involved.

The damage inflicted in the Square Mile will be permanent, said another head of investment banking. “London as a financial centre will remain, but will be severely diminished.”
Times are changing. Just as Little Englanders carried the day during the Brexit referendum, so it's fitting that the UK is left with a Lilliputian financial services sector to match its citizens' backward- and inward-looking proclivities. Frankfurt, Paris, parts unknown are calling...