EVER since the UK voted to leave the EU in 2016, the City of London knew it would have to fight to keep its crown as Europe’s leading financial centre, writes Alex Orr.
Just a matter of weeks after the transition period ended on Hogmanay, Amsterdam succeeded in becoming Europe’s largest share trading centre in January.
This dislodging of the UK from its historic position as the main hub for the European market is an early indication of the direction of travel that awaits the City post-Brexit. It also puts paid to the hope that the loss of key financial services activities from London might be gradual, rather than falling off a cliff.
This is because one issue not addressed in the Brexit talks, and for which negotiations are ongoing, was that of financial regulation. Brussels has refused so far to grant the UK “equivalence” status – a regulatory threshold that would mean the City of London could trade unhampered in European markets.
The negotiations on future financial regulation appear to have run into the sand, and Amsterdam’s success is a clear reminder of the failure of Prime Minister Johnson’s Government to ensure that financial services were part of the Brexit talks and resulting deal.
The Government’s incompetence is doubly staggering because Britain has given the EU equivalence, allowing EU banks to operate in UK markets, a decision which has left the UK little leverage in the negotiations.
The impacts of Brexit’s impacts are becoming clear for all to see, and combined with Covid-19 will only serve to damage the fragile UK economy even further.
Letter to the Herald
For an in-depth analysis of the threat to London as a financial centre read this longer piece from the Federal Trust by Graham Bishop, a leading financial consultant
and watch him speak here