London chaos: EU ‘sucking money’ away from City as Brexit row erupts

Dominic Raab dismisses EU threat to City of London

When you subscribe we will use the information you provide to send you these newsletters. Sometimes they’ll include recommendations for other related newsletters or services we offer. Our Privacy Notice explains more about how we use your data, and your rights. You can unsubscribe at any time.

The City of London suffered a loss of £2.3 trillion in a single month in its lucrative derivatives trading market, reports outlined earlier this week. Using the month of July to mark pre-Brexit activity, research shows that the percentage of euro-based swaps carried out on venues hosted by British platforms has dropped from 40 percent in July to just 10 percent in March. The figures come only a few months after Bank of England governor Andrew Bailey warned the EU would likely try to snatch away trillions of pounds of derivatives clearing from London’s major clearing houses in a series of moves that could threaten financial stability.

Professor Iain Begg of the London School of Economics has told Express.co.uk that, while money is being “sucked” out of London into EU capitals, there isn’t need for major concern just yet.

He said: “It is certainly the case that jobs are to not just Amsterdam but also Paris and Frankfurt and Dublin has been a major winner too.

“That’s financial activity that needs to be inside the eurozone being sucked away from London, at the same time the City is reinventing itself and looking at where it has markets globally.

“As yet, I don’t think there is any clear indication that the City is a loser from Brexit, but it may be that some European centres are marginal winners. If the trickle turns into a flow then we can say this is something damaging for the British economy.”

Professor Begg also highlighted that the City of London has some key advantages which could help in holding on to its status as a key financial hub.

He said: “If you are a big multinational based in a European country and you are trying to get financing, London is the place to go because it offers the services you don’t get elsewhere.

“If that becomes a little bit harder then either your cost of getting the capital goes up a bit or you start to look elsewhere, and that may be a stimulus for European financial centres.

“But it’s a bit like a football league – London is in the global Premier League and the European financial centres are in the Championship.”

The tension between the UK and EU over financial services has continued this week amid reports France may halt negotiations.

France’s government reportedly warned the UK it could thwart an arrangement without concessions on fishing.

A spokesman for Boris Johnson said the feud was “another example of the EU issuing threats at any sign of difficulties instead of using the mechanisms of our new treaties to solve problems”.

They added: “We’ve always been clear that an agreement on financial services is in the best interests of both sides.”

DON’T MISS
Brexit row: EU ‘taking comfort in how much the UK has lost’ [INSIGHT]
EU ‘won’t be nice to UK’ – City of London to be shown no mercy [ANALYSIS]
Brexit: London ‘the Premier League’ while EU ‘the Championship’ [INSIGHT]

New Financial think tank released a study last month warning Brexit had hit London badly.

The study said over 400 financial firms in Britain have shifted activities, staff and a combined trillion pounds in assets to hubs in the EU due to Brexit.

It added: “We think it is an underestimate and we expect the numbers to increase over time: we are only at the end of the beginning of Brexit.”

Source: Read Full Article