Doubts hang over Lon­don

Can the City re­tain its sta­tus?

The Star Early Edition - - INTERNATIONAL - An­drew MacAskill and Huw Jones

BRI­TAIN will lose its sta­tus as Europe’s top fi­nan­cial cen­tre un­less it keeps bor­ders open to spe­cial­ist staff, im­proves in­fra­struc­ture and ex­pands links with emerg­ing economies, TheCi­tyUK said in a re­port pub­lished yes­ter­day.

The re­port from Bri­tain’s most pow­er­ful fi­nan­cial lobby group said con­ti­nen­tal Europe might even­tu­ally be­come the pre­ferred des­ti­na­tion for banks, in­sur­ers and as­set man­agers as they re­lo­cate busi­ness there to re­tain ac­cess to the EU sin­gle mar­ket.

Although com­pa­nies may be­gin by ini­tially shift­ing a small num­ber of jobs to Europe this may be­gin to ac­cel­er­ate when prop­erty leases ex­pire, they carry out busi­ness re­views, or when the cost of cap­i­tal be­comes un­eco­nom­i­cal.

“Shifts out of the UK may grad­u­ally erode the ‘clus­ter ef­fect’ of the fi­nan­cial ecosys­tem, with the threat of a tip­ping point in the ecosys­tem be­ing reached,” the group said in an 83-page doc­u­ment out­lin­ing how the in­dus­try can thrive over the next decade.

Chal­lenge

Se­cur­ing a favourable deal for fi­nan­cial ser­vices from the Brexit ne­go­ti­a­tions is one of the big­gest chal­lenges for the Bri­tish govern­ment, be­cause it is its largest ex­port sec­tor and big­gest source of cor­po­rate tax.

Bri­tain’s fi­nance in­dus­try could lose up to £38 bil­lion (652.25bn) in rev­enue in a so­called “hard Brexit” that would re­strict its ac­cess to the EU sin­gle mar­ket, ac­cord­ing to some es­ti­mates.

The re­port said the govern­ment must en­sure busi­nesses can re­cruit people to fill skill gaps and must sim­plify the process of get­ting a visa.

Brexit has al­ready made it harder to at­tract people to Bri­tain and the govern­ment is in­tro­duc­ing poli­cies mak­ing im­mi­gra­tion more re­stric­tive and ex­pen­sive, the re­port said. It said the cost of hir­ing an em­ployee on a five-year visa has risen by 250 per­cent to £7 000 over the last year and the min­i­mum salary a busi­ness may re­cruit staff for a visa has risen by al­most half since 2015.

Broader is­sues

Aside from Brexit, the re­port also looks at broader is­sues that threaten the com­pet­i­tive­ness of the City of Lon­don as fi­nan­cial ser­vices hub, in­clud­ing a need to in­vest in trans­port net­works and tech­nol­ogy.

It calls for the govern­ment and fi­nan­cial ser­vices to work to­gether closely to de­velop in­ter­na­tional trade poli­cies and to im­prove the coun­try’s dig­i­tal and phys­i­cal in­fra­struc­ture, in­clud­ing speed­ing up travel times be­tween air­ports and dif­fer­ent fi­nan­cial cen­tres around Bri­tain.

One fi­nan­cial ser­vices in­dus­try vet­eran who had in­de­pen­dent ac­cess to the re­port said it lacked ur­gency and there was too lit­tle on the im­pact of Bri­tain leav­ing the EU given that “Brexit is a catas­tro­phe for the City.”

Mark Hoban, a for­mer fi­nan­cial ser­vices min­is­ter who chaired the re­port, said that Brexit was only one of sev­eral chal­lenges fac­ing fi­nan­cial ser­vices. “The chal­lenges fac­ing fi­nan­cial ser­vices are much more than just about Brexit. It is about emerg­ing fi­nan­cial cen­tres and also, to a de­gree, about un­met needs in the UK as well,” Hoban said.

“There is a very clear ap­petite to tackle these is­sues at var­i­ous lev­els of govern­ment.” – Reuters

The City of Lon­don sky­line. Can it re­main Europe’s fi­nan­cial cen­tre after Brexit? PHOTO: AP

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