Has Brexit fatally dented the City of London’s future?

Although the Square Mile will remain Europe's largest money marketplace it will no longer be the continent's de facto financial centre

Nearly five years after the Brexit referendum, and in the five months since Brexit itself, there has been little debate about the future of the City, the financial centre of London. Those who voted in June 2016 to leave the EU believe, whatever the evidence to the contrary, that the impact will be minimal, and that the warnings of job losses and business relocation are exaggerated. Remain voters are programmed to think the opposite and, whatever the evidence to the contrary, forecast gloom and doom. What can we learn from what has actually happened?

We have to acknowledge, first, that Covid-19 has confused the picture mightily over the last 18 months. People have not found it easy to change location, even if they wanted to. More important, there are some temporary regulatory arrangements that blunt the impact of the UK's departure from the single financial market. There is a Temporary Permissions Regime in London for some EU-based firms, and the European Commission has allowed euro-denominated instruments to be cleared in London until 2022, to avoid the disruption any sudden change on 31 December 2020, might have brought. So what we are seeing today may not reflect Brexit's full longer-term impact.