London’s Status as Global Finance Center at Risk from Brexit, Warn Leading Bankers
Leading bankers warned on Thursday that Britain is yet to feel the real impact of Brexit which will undermine its status as a global finance center as companies prepare to shift jobs out of London to preserve access to Europe’s single market.
Goldman Sachs Chief Executive Lloyd Blankfein said that while the U.S. bank will keep its new $1.4 billion new European headquarters in London, it might have chosen another location if it had known Brexit was coming.
“We’re still building it, the cranes are working but we might have made a different decision a few years ago,” Blankfein told Politico in an interview.
The future of London as Europe’s financial center is one of the biggest issues in Brexit talks because it is Britain’s largest export sector and biggest source of tax. Rival cities within the EU are battling to draw highly-paid banking jobs and the revenues they bring.
As Prime Minister Theresa May plots Britain’s course for Brexit, London’s financial services industry is scrambling to prepare for losing access to the world’s biggest trading bloc, its biggest challenge since the 2007-2009 financial crisis.
The sector accounts for about 12 percent of Britain’s economic output and pays more taxes than any other industry.
Blankfein said companies are taking decisions that may result in less economic activity in Britain although he said that he was surprised at how little effect Brexit has had at this stage. Britain is due to leave the EU next March.
“I am at least wrong in that I would’ve thought there would be a worse outcome by now,” he said.
The chairwoman of Spain’s biggest bank Banco Santander Ana Botin warned that growth in London’s financial center was set to stall due to the turmoil triggered by Brexit.
“I don’t think so many companies or people are going to leave the UK, it is the people that are not coming that we should worry about because the UK was on a huge upward trend and that is not as strong now,” Botin told the audience at an event organized by the Wall Street Journal in London.
But Britain’s Brexit minister David Davis was more upbeat. He told a conference in London that the city will retain its crown as Europe’s financial hub and said the government’s plans for immigration after Brexit will not hurt businesses.
“There is not going to be a mass migration, the critical mass is still going to be here,” Davis said.
“We are still going to be the biggest and most important financial center in the world in five years, in 10 years.”