London ‘to keep status of global finance titan even in event of no-deal Brexit’
LONDON will remain a large global financial centre even in adverse Brexit scenarios, according to the Central Bank of Ireland.
The Central Bank published a financial stability note by economists Silvia Calo and Valerie Herzberg yesterday which examines the future of global financial centres (GFC) after Brexit, from an EU perspective.
The report found that London will likely remain a very large global financial centre and the impact of Brexit on the city’s financial centre could be very small due to the “premium” it enjoys.
“While a less open, productive and rich UK might influence the future path of the City, according to our analysis the impact of fundamental factors could be very small. Yet London also displays a ‘premium’,” the report states.
“This premium could be sensitive to a possible deterioration of perceptions and abrupt changes in regulation and centrality due to new trading arrangements, disruption in global value chains and institutional reshaping and associated uncertainty.
“How Brexit will eventually affect the City of London remains uncertain, even if several firms have already relocated from London to other EU countries in the aftermath of the vote.”
The study suggests that London will remain one of the major global centres irrespective of shock impacts, taking into consideration data for the size of the country and city, trade openness, economic development, host city innovation, dominant currencies and legacy effects.
However, it found London’s status might be vulnerable to changes affected by new trading arrangements, disruption in global value chains and institutional reshaping and associated Brexit uncertainty.
The research presents a set of scenarios for the future of London and other financial centres in Europe after Brexit and concludes the impact of fundamental factors on London could be very small.
The research also found the potential dispersal of financial services to smaller centres in the EU, including Dublin, could have an impact.
The report added: “The rapidly growing and changing nature of the Dublin financial centre, coupled with the visible fragmentation of finance in Europe, also raises questions about the evolution of financial stability risks.”
❝ A less open, productive, rich UK may influence the City’s future path... yet London also displays a ‘premium’