Sunday, February 28, 2021
Expert sure despite Brexit
"London Remains Global Financial Center"
Because of the Brexit, many financial service providers have withdrawn their employees from London. The British capital has now been replaced by Amsterdam as the largest stock market in Europe. But an expert is now warning against writing off Great Britain entirely in this regard.
Despite ambiguities in the Brexit agreement with the EU, an expert warns against writing off the UK as a financial center. "Despite Brexit, London remains one of the most important global financial centers," says Frank Eich, a former advisor to the British central bank.
In the western hemisphere only New York like London offers a "breadth and depth of specialist knowledge and skills", such as insurance, investment banking, legal services, venture capital or fintechs. The British capital lacks the large US market. "In return, London is probably more diverse – for example, a leader in the Islamic financial world – and more internationally focused."
The Brexit, which was concluded at the beginning of the year, is putting the EU under pressure to increasingly handle specialized financial services previously provided in London within the Community. Because of the Brexit, numerous institutes have moved thousands of employees from London to EU cities such as Frankfurt, Paris and Dublin. By March, London and Brussels want to agree on the mutual recognition of standards – called equivalence.
No more "passport" rights after Brexit
With Brexit, British financial service providers lost their "passport" rights, which enabled them to operate in the EU internal market without additional regulatory approval. Therefore, British companies must either meet the regulatory requirements of each individual EU member state or rely on the EU to judge the British regulatory framework as equivalent.
Most recently, London was ousted by Amsterdam as the largest stock market in Europe. "Since European investors were no longer able to trade shares on the London Stock Exchange without a financial services agreement between Great Britain and the EU, trading activities had to be relocated to an EU member state," said Eich, who now works for the management consultancy Economicsense. The development was inevitable. "However, there is more to a financial market than just trading stocks on an electronic platform."
British central bank governor Andrew Bailey recently warned the EU that it would have to pay a heavy price if it wanted to cut London off.
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