Project Fear Wrong Again: London Remains a Finance Capital, Growth Since 2016 Brexit Vote

People walk over Westminster Bridge wrapped in Union flags, towards the Queen Elizabeth Tower (Big Ben) and The Houses of Parliament in central London on June 26, 2016.
ODD ANDERSEN/AFP/Getty

Investors are shrugging off Project Fear and committing to a future in London, as several measures show the city continues to be a global capital for finance.

Property developer Stuart Lipton, whose £1 billion Bishopsgate skyscraper will be the second tallest in Europe when completed, told Reuters: “London is extraordinarily resilient, and its future as a finance centre is secure because what we have here is unique.”

Other significant investors have put their money on Brexit Britain. Goldman Sachs had opened its new £1 billion European headquarters in July, just over three years since the UK voted to leave the EU. While in January, Morgan Stanley’s chief executive, James Gorman, reportedly said during an analyst call that he is hardly concerned about Brexit: “That’s not in my top 200 issues today.”

On the ground, senior bankers are reportedly not looking to move to mainland Europe after Brexit, as project fear reports had claimed before the 2016 vote. One chief executive of a top European bank told Reuters he would even consider a 20 per cent salary cut to stay in London.

He said: “If you are an Italian banker, who moved out to London 20 years ago, and your kids go to private school around the corner then you are not going to move to Frankfurt.”

These reports are coming despite what the news organisation described as the “cataclysmic warnings” during the 2016 referendum that London would “lose its financial throne if it voted to leave the European Union”.

Those predictions “have, so far, been proven wrong. London is still the world’s banker, only bigger by some measures,” Reuters stated.

Ten senior financial industry officials told the news organisation that, in fact, London’s financial services sector had grown since 2016 because there is “no realistic competitor in its time zone”.

Indeed, many different measures rank London second or first for foreign investment and financial services.

In the year to June, London had attracted more cross-border property investment than any other capital. London is the largest net exporter of financial services in the world. The city overtook New York City as a top destination for fin-tech (financial technology). Since the vote to leave the EU in 2016, the UK has passed the U.S. to become the largest centre for trading interest rate swaps.

In September, Z/Yen’s widely-referenced Global Financial Centres Index (GFCI) ranked London as the number two financial centre globally. While in April, Ernst & Young placed the UK as the top investment destination for the first time in the EY Global Capital Confidence Barometer’s 10-year history.

While the UK is facing Brexit in rude health, European powerhouse Germany has been experiencing a weak growth cycle. In August, the country’s central bank predicted a recession. Predictions have been revised, with Reuters reporting on Monday that the German Economy Ministry said that “a stronger slowdown or a pronounced recession are not to be expected at the moment”. However, the German economy “remains in stagnation”.

Last week, the UK’s Office for National Statistics said Britain is on track to avoid a recession, defying forecasts “despite Brexit”, The Guardian notes.

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