A big issue in the Brexit debate is what will happen to the City of London.
Listening to some people talk, you could be forgiven for thinking all our banks were about to shut down and move overseas.
They aren’t and they won’t...
GERARD LYONS City of London is Brexit-proof and will still lead Europe even after we leave the EU, says Economic expert
If you've listened to certain reports over the past year you'd be forgiven for thinking all our banks were about to move overseas - they won’t and here's why
Comment
By Dr Gerard Lyons, Economic expert
2nd August 2017
The Sun
A BIG issue in the Brexit debate is what will happen to the City of London.
Listening to some people talk, you could be forgiven for thinking all our banks were about to shut down and move overseas.
The league table ranking financial centres has London as number one in the world
They aren’t and they won’t.
Our financial sector has two parts to it: the domestic part serving people and firms in the UK and the international component, known as “The City”.
The City is important for our economy. It creates jobs and business here and also attracts talent and investment from around the world.
The league table ranking financial centres has London as number one in the world. In second place is New York, closely followed by Singapore and then Hong Kong.
This is where London’s future competition is, not in Europe.
In fact, the next highest-ranked centres in Europe are Zurich at 11th and Geneva at 20th. Remember, Switzerland is not in the EU.
In second place is New York, followed by Singapore and then Hong Kong – this is where London’s future competition is, not in Europe
The cities that hope to grab some of London’s jobs are low down the list: Frankfurt is 23rd, Paris 29th, Dublin 33rd and Amsterdam 40th.
While rankings can change, the reality is they will not move much.
Thus, it is no surprise why the widespread view across the City is that London will remain Europe’s leading financial centre — even after Brexit.
In fact, the current mood in the City is good. Hiring is up. More jobs are being created in London. Business looks solid.
In the past, London has been seen as the place to both do business “in” and “from”.
The three biggest financial centres in Europe are London, Zurich and Geneva - and, just like London soon, Zurich and Geneva are not in the EU
So the current recovery in the world economy is positive for us.
This is a big change from a year ago. Then, in the aftermath of the referendum, there was much uncertainty.
Since then, of course, we did not have the financial armageddon forecast by the then Chancellor George Osborne.
George Osborne, as Chancellor, was always a strong Remainer
The economy has held up well, receiving huge inward investment from overseas. But there is no denying that some financial business will move to the EU.
This is hard to quantify but it is not expected to be large.
Some banks service their EU clients out of London, using a financial passport.
In case this passport is withdrawn, they are setting up on the ground in other EU centres and are moving business now — Nomura and Morgan Stanley are both examples.
Morgan Stanley is already starting to move business now out of London
It is not a necessity for this to happen.
Yet, because they have to plan well ahead and the outcome of the Brexit negotiations is unclear, they are thinking better safe than sorry.
This is understandable.
But even if some jobs move, the bulk of operations will stay in London.
One way to think of it is that the financial cake is getting bigger with a slice of the action going elsewhere but the bulk of the cake is remaining here.
Nomura is also starting to move parts of its business to the EU in preparation for the UK leaving in March 2019
Of course, it is important never to be complacent. One in eight people who work in the City are from the EU. The City’s biggest concern currently is uncertainty over the future rights of EU citizens.
Also, many banks would like a temporary transition agreement after we have left the EU in March 2019 to allow them time to make plans with certainty, rather than rushing into things now.
Despite these challenges, we should be positive. The City of London has a history of reinventing itself.
In the last year, London has cemented its position in some new growing business areas, including trading of the offshore Chinese currency, Islamic finance and green bonds.
The City’s biggest concern is the uncertainty over the future rights of EU citizens
Also, many small firms are excited about the ability to break free from the unnecessary regulations of the EU.
Perhaps, more importantly, London is establishing itself as the “financial technology” or “fintech” centre of the world.
The future of international finance is becoming more interlinked with technology.
For many in the City, one of the most important events of the last year was when Google confirmed it was proceeding with its new technology hub in King’s Cross, housing around 2,500 staff, many of whom will be tech engineers.
Despite the cloud of Brexit, Google has confirmed it will proceed with its new technology hub in King’s Cross, housing around 2,500 staff, many of whom will be tech engineers
Other firms in the tech sector have followed this lead.
This reinforces one of London’s key selling points.
Not only is it an exciting place to live, it also benefits from “agglomeration effects” as it has everything needed for a successful financial centre.
The factors that make London and the City strong are Brexit-proof
It has the combination of skills, knowledge and experience of people and also an infrastructure of banks, consultants, lawyers and technology experts that is difficult to rival.
So the factors that make London and the City strong are Brexit-proof.
Dr Gerard Lyons is chief economic strategist at Netwealth Investments.
https://www.thesun.co.uk/news/4149720/city-of-london-brexit-proof-economic-expert-gerard-lyons/
Listening to some people talk, you could be forgiven for thinking all our banks were about to shut down and move overseas.
They aren’t and they won’t...
GERARD LYONS City of London is Brexit-proof and will still lead Europe even after we leave the EU, says Economic expert
If you've listened to certain reports over the past year you'd be forgiven for thinking all our banks were about to move overseas - they won’t and here's why
Comment
By Dr Gerard Lyons, Economic expert
2nd August 2017
The Sun
A BIG issue in the Brexit debate is what will happen to the City of London.
Listening to some people talk, you could be forgiven for thinking all our banks were about to shut down and move overseas.
The league table ranking financial centres has London as number one in the world
They aren’t and they won’t.
Our financial sector has two parts to it: the domestic part serving people and firms in the UK and the international component, known as “The City”.
The league table ranking financial centres has London as number one in the world. In second place is New York, closely followed by Singapore and then Hong Kong.
This is where London’s future competition is, not in Europe.
In fact, the next highest-ranked centres in Europe are Zurich at 11th and Geneva at 20th. Remember, Switzerland is not in the EU.
In second place is New York, followed by Singapore and then Hong Kong – this is where London’s future competition is, not in Europe
The cities that hope to grab some of London’s jobs are low down the list: Frankfurt is 23rd, Paris 29th, Dublin 33rd and Amsterdam 40th.
While rankings can change, the reality is they will not move much.
Thus, it is no surprise why the widespread view across the City is that London will remain Europe’s leading financial centre — even after Brexit.
In fact, the current mood in the City is good. Hiring is up. More jobs are being created in London. Business looks solid.
In the past, London has been seen as the place to both do business “in” and “from”.
The three biggest financial centres in Europe are London, Zurich and Geneva - and, just like London soon, Zurich and Geneva are not in the EU
So the current recovery in the world economy is positive for us.
This is a big change from a year ago. Then, in the aftermath of the referendum, there was much uncertainty.
Since then, of course, we did not have the financial armageddon forecast by the then Chancellor George Osborne.
George Osborne, as Chancellor, was always a strong Remainer
The economy has held up well, receiving huge inward investment from overseas. But there is no denying that some financial business will move to the EU.
This is hard to quantify but it is not expected to be large.
Some banks service their EU clients out of London, using a financial passport.
In case this passport is withdrawn, they are setting up on the ground in other EU centres and are moving business now — Nomura and Morgan Stanley are both examples.
Morgan Stanley is already starting to move business now out of London
It is not a necessity for this to happen.
Yet, because they have to plan well ahead and the outcome of the Brexit negotiations is unclear, they are thinking better safe than sorry.
This is understandable.
But even if some jobs move, the bulk of operations will stay in London.
One way to think of it is that the financial cake is getting bigger with a slice of the action going elsewhere but the bulk of the cake is remaining here.
Nomura is also starting to move parts of its business to the EU in preparation for the UK leaving in March 2019
Of course, it is important never to be complacent. One in eight people who work in the City are from the EU. The City’s biggest concern currently is uncertainty over the future rights of EU citizens.
Also, many banks would like a temporary transition agreement after we have left the EU in March 2019 to allow them time to make plans with certainty, rather than rushing into things now.
Despite these challenges, we should be positive. The City of London has a history of reinventing itself.
In the last year, London has cemented its position in some new growing business areas, including trading of the offshore Chinese currency, Islamic finance and green bonds.
The City’s biggest concern is the uncertainty over the future rights of EU citizens
Also, many small firms are excited about the ability to break free from the unnecessary regulations of the EU.
Perhaps, more importantly, London is establishing itself as the “financial technology” or “fintech” centre of the world.
The future of international finance is becoming more interlinked with technology.
For many in the City, one of the most important events of the last year was when Google confirmed it was proceeding with its new technology hub in King’s Cross, housing around 2,500 staff, many of whom will be tech engineers.
Despite the cloud of Brexit, Google has confirmed it will proceed with its new technology hub in King’s Cross, housing around 2,500 staff, many of whom will be tech engineers
Other firms in the tech sector have followed this lead.
This reinforces one of London’s key selling points.
Not only is it an exciting place to live, it also benefits from “agglomeration effects” as it has everything needed for a successful financial centre.
The factors that make London and the City strong are Brexit-proof
It has the combination of skills, knowledge and experience of people and also an infrastructure of banks, consultants, lawyers and technology experts that is difficult to rival.
So the factors that make London and the City strong are Brexit-proof.
Dr Gerard Lyons is chief economic strategist at Netwealth Investments.
https://www.thesun.co.uk/news/4149720/city-of-london-brexit-proof-economic-expert-gerard-lyons/
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