London is the undisputed financial capital of the EU, although that may change after the Brexit. Most City workers were against the Brexit (and the population of London in general), is that, knew existed many possibilities of losing their jobs if there was Brexit.
The survival of the City as a European financial center (to give us an idea is the largest hub currency exchange in Euros in the world), it will mainly depend on two things, the first is the “passport” which allows banks of any country operating in another, the second is the movement people. Approximately 11% of the 360,000 workers in the City come from other EU countries. Freedom of movement of people allowed to bring easily qualified workers across Europe.
Suppose there is agreement
When we talk about the possibilities of the United Kingdom after the Brexit, we talked about the possibility for the EU to sign some agreement with the UK as it has with Switzerland and Norway. Switzerland and Norway waive part of its national sovereignty and contribute to the EU budget in order to have access to the vast European countries equivalent to market that are part of the EU.
In a way, small countries do not find it so bad relinquish some of their national sovereignty; they get much more to be integrated in such a large economic bloc. The question is whether a country which has just voted, among other reasons, to get rid of the EU regulation, to contribute to the budgets and freedom of movement of people, accept a similar agreement.
In case of reaching an agreement of this kind, as I said, it would be a way out of jure, but not de facto EU. Possibly British banks continue to have their passport, and the output would be less traumatic for the British financial services industry and would be less transfer to other European financial centers.
But of course this always from a perspective that other countries would be to allow London to be the European financial capital. Which I doubt happens in negotiations within two years. First, because I doubt the EU countries accept it and secondly because right now the UK do not even have the team of negotiators in international trade, which the EU itself, and has drawn attention to respect attorney for European Affairs (and spouse of former deputy Nick Clegg’s Ministers) Miriam Olmedo.
And if there is no agreement (or it was not so good for the financial sector)
Now suppose that there is no agreement, I think this is not good enough for the City British banks lose as equal access to the European market. This is something that has already been discussed, and that large banks are already considering. It is very likely that large banks begin to take their operations and services to other European markets.
For example, JP Morgan has 16,000 employees in the UK, and estimated that it could take between 1,000 and 4,000 to other European markets. HSBC estimates that move to Paris about 1,000 employees, who will have to use the “Chunnel” if they want tokeep going London frequently. The Deutsche Bank has 9,000 employees in the UK alone and has already begun to raise a few of them move to other places (quite possibly Frankfurt). According to PwC, the Brexit could cost between 70,000 and 1000,000 jobs to the British financial services industry by 2020.
The question posed now banks is where do I take non-UK operations? Here we have several options, but the truth is that none offers what London offered them. For example, Dublin is Anglophone and offers an attractive tax regime, but it is still a smaller city without international connections offered Heathrow. Paris and Frankfurt are not native English speakers, and although it is true that Frankfurt would be the financial center of the euro zone, is seen as a somewhat provincial place to have 700,000 people compared to millions who were used to bankers in London. Other places like Amsterdam and Lisbon, will also want to attract something to fight for. London is going to fight to keep what you can.
Actually the two most advanced contenders are Paris and Frankfurt. Hollande has already launched a campaign called “Welcome to Europe” and in Frankfurt and is mounted a campaign on social networks known as “Welcome to Frankfurt What can we do for you?” Regarding Madrid and Barcelona, currently there they have done anything. and I do not imagine Ada Colau and to a lesser extent Manuela Carmena trying to attract investment banks, despite the skilled and well paid these often lead to the inhabitants of the city.
It is very likely that no city runs out to be the big winner of those who can leave the City, I would expect a Cambrian explosion of financial centers and various departments be for moving to various places, on the one hand to optimize the best thing of each (labor costs, taxation, legislation, etc.) and the other for other possible Exits. Of course, this decentralization and redistribution, is likely to make European financial centers will not be able to compete globally as was the City, by exploiting synergies least.
Who can really end up winning?
And who is the winner of dismantling the City? Here we have talked about Frankfurt or Paris, but the winners of this process most likely are not in Europe, but you have to go look much further.
Quite possibly the Asian financial centers such as Singapore or ShangKong going to end up winning that place was London . For example the insurance market was very focused on London and Lloyds (the insurance market, we should not confuse with the bank), and this may be leading to end Asia. For more reviews like this content visit http://phase-2.org/.