As Brexit Triggered, European and Asian Rivals Circle for London’s Financial Crown
“Even though we've chosen to leave the European Union, we're not going to stop being friends, we're not going to stop being allies,” Mayor Khan told his Parisian hosts.
Friends, but also rivals. Paris is among the European cities vying for London’s crown as Britain leaves the European Union in a process that could make it much more costly for British businesses to operate in Europe.
Britain's government formally notified Brussels Wednesday of its intention to leave the European Union, triggering a two-year period of negotiations over its departure and future relations.
London is looking on with alarm, as it seems likely Britain will leave the European Single Market, which gives it preferential access to the world’s biggest free trade bloc.
Mark Yeandle is lead author of the Global Financial Centers Index, a six-monthly survey of financial services professionals worldwide. In the latest rankings, published this week, London retained its top spot, but Brexit uncertainty saw its score tumble.
“Some people will move to other more central European destinations. But overall in London I can’t see a mass exodus. London isn’t suddenly going to disappear off the face of the Earth. I mean all the big America tier 1 banks, they’re based here,” Yeandle told VOA.
He says other European cities will struggle to replicate London’s mix of financial infrastructure, human resources and culture. Its closest European rival is Luxembourg in 18th place on the index.
In 23rd place is Frankfurt, Germany’s economic hub and home of the European Central Bank. Eric Menes, manager of the Frankfurt Rheinmain investment agency, says they are well prepared for Brexit.
"We have got all the international schools in place, we have enough office space, so I think we are ready," said Menes. "We are pretty sure that a rather large contingent [of bankers] will actually end up moving to Frankfurt."
Paris has other ideas. It claims to have the culture needed to attract staff away from London. HSBC, Britain's biggest bank plans to relocate around 1,000 jobs from the British capital to Paris by 2019. Arnaud de Bresson is CEO of Paris Europlace, a government agency tasked with making the French capital Europe’s financial hub.
"The difference between Paris and Frankfurt is that Paris, for our clients, is the city of big companies, both French and global, with a lot of activity on the markets,” he said.
Asian markets
Ultimately it is the fast-growing economies in Asia that could benefit, says Mark Yeandle.
“Singapore in third, and then Hong Kong in fourth, were historically well over a hundred points behind London and New York in second. Singapore is now only 20 points behind New York. So there’s a massive catch-up.”
New York also saw its score fall in the latest index rankings, owing to uncertainty surrounding the election of U.S. President Donald Trump.