$4 trillion a day changes hands on the foreign exchange market, and half of that is in London. England is going to be OK, people. Project Fear has been voted down, after all.
This happens primarily because the city of London has a lot of exceptions provided to it by the EU and becomes an attractive place for the Americans, Chinese and Japanese institutions to funnel money into EU markets. It is really in a role similar Hong Kong vis a vis China. With Brexit, EU every reason to promote places like Luxembourg and other financial centers as the financial hub and end exceptions that make City of London competitive. Banks being banks will simply close offices and move business across the water.
Multiple banking houses have at least indicated that they're willing to migrate. Even more important, a lot of financial products in the banking/insurance sector rely on passporting, that is if they're accepted in one EU country, they can be sold anywhere in the EU. That country used to be England up to now. Given that nobody knows if/when the real separation will happen, I fully expect banks and insurances to hedge their bets and start moving that to other countries.
No, it's not evidence since evidence can only be gathered post-fact. Just don't be surprised if they follow through, because well, they told you before which consequences the change would have.
Well so is the parent comment which is arguing essentially that things are fine today and so they will continue be fine in the future.
I'm simply suggesting that may not be the case since EU is now likely incentivized to disrupt the current status if only to set an example. Rather than disrupt physical trade that is linked to export oriented mainland jobs, financial sector may be a riper target as barriers to moving these jobs are low (essentially no capital investment), disrupting it can be used to create jobs on the mainland and can create a punitive effect on UK.
London is very expensive. Banks already have significant motivation to move operations somewhere cheaper, and have been doing so when they can.
That said, whilst it may seem tempting to run to the EU, other countries have been wanting to kill off the city and take its profits for their own for a long time. In the event of a remain vote, they may simply have been emboldened to outvote the UK and do it anyway, hence the focus in Cameron's negotiations on protecting the City. He knows it is vulnerable.
The banks now face a choice. Which is more risky/expensive. Needing to go through separate EU regulatory processes and get an EU "passport" via a subsidiary. Or relocate to e.g. Paris, and have all their activity be regulated by an EU now dominated by socialist governments rather than just some of it.
Fearmongering, nothing more to see here. Like I said, there is no current evidence that this will happen. BTW, threats from banks do not constitute evidence that they will do something perceived by a losing political faction as negative.
All the banks operating out of London have contingency plans that, at the very least, will move their primary legal entities to continental Europe.
If this had happened 10 years ago they would probably have moved them to Ireland but that won't happen now.
This isn't scaremongering. It's just the way the banks have to do business. It doesn't directly mean that all finance jobs will move to the continent. They won't. But there will be a slow migration over the next few years.
It is also highly likely that, over the next few years, the EU will implement the finance reforms that the UK has been blocking e.g. the transaction tax. It is almost unthinkable that they won't implement that for UK banks.
It is also wholly in the EU's interest to delay a trade deal on services and financial services in particular as the UK has a significant surplus wrt the rest of the EU. It's more questionable over manufacturing as we run a deficit. How quickly we can negotiate a deal will be a toss up between industry that will want one and politicians who are likely to cause a fair degree of pain pour encourager les autres.
> Out of interest why do you suggest that if the banks move they wouldn't move to Dublin?
Because some have been there and it almost took out the Irish economy. They, the Irish, won't allow that to happen again any time soon. The fact is that the Irish economy is quite small and banks' balance sheets are quite big.
Realistically, only Germany, France and maybe Italy would be big enough to take a significant chunk of the UK banking sector.
