Brexit and the City
189 Pages Posted: 31 May 2018
Date Written: May 22, 2018
‘Brexit and the City’ reviews both the principal issues affecting the City of London following the Referendum vote to leave the EU and the key proposals that have been made for the City’s future relationship with the EU. The latter are examined in the light of the European Commission’s negotiating strategy and also what is needed to achieve the best possible outcome for the City and the UK economy.
The report concludes that Brexit is a golden opportunity for the City of London to escape the protectionist clutches of the EU in order to maintain its position as a World Financial Centre leading the new digital revolution of blockchain and fintech.
But to make the best of Brexit, the City needs to address the following issues. First, it should recognise that its place is to service the real financial needs of businesses and individuals in the UK, Europe and the rest of the world and that this is best done outside the EU which, because of its protectionism, its excessive regulation and the folly of the euro, is destroying growth and innovation in the EU member states.
Second, it should agree a ‘consistent and forward-looking Brexit strategy’ in order to secure a ‘bold, bright, buccaneering post-Brexit future’, as demanded by the Lord Mayor of London, Jeffrey Mountevans, at the City Banquet at Mansion House on 26 October 2016.
Third, it should build on the protections afforded by international law to counter the EU’s demands that providers of financial services to EU citizens and companies need to be physically located in the EU to do business. It is just as absurd to expect the City of London to move to Paris or Frankfurt after Brexit as it is to expect the French wine industry or the German car industry to move to the UK. There is more investment banking expertise on the Isle of Dogs than in the whole of continental Europe put together.
Finally, it should aim to quickly recover the competitive edge that it has lost in recent years. The WTO has estimated that the City’s share of China’s imports of financial services (mainly insurance) was 3% in 2015, unchanged since 2011. Over the same period, the US share increased from 11% to 28%.
Keywords: City of London, Brexit, European Union, regulatory equivalence, mutual recognition of regulations
JEL Classification: G20, G28
Suggested Citation: Suggested Citation