UK’s financial pulse
22 November, 2017, 12:00 am
LONDON – Will Britain’s decision to leave the European Union in 2019 damage one of its most successful industries?
The financial services sector, which accounts for about 12 per cent of Britain’s economic output and pays more tax than any other industry, potentially has a lot to lose from the end of unfettered access to the EU’s post-Brexit market of 440 million people.
Known for centuries as “the City”, London’s financial center has expanded beyond its original heartland in the City of London to the skyscrapers of Canary Wharf in the east and plush townhouses in Mayfair to the west.
The British capital dominates global foreign exchange, and features international bond and fund management operations and more banks than any other hub.
But it is particularly vulnerable to a Brexit shock, because about a third of the transactions which take place on its exchanges and in its trading rooms involve clients in the EU.
This has led some politicians and economists to predict London will lose its pre-eminence as a financial center after Brexit, although supporters of leaving the EU say Britain will benefit over the long term by being able to set its own rules.
Reuters has created a tracker to monitor six indicators to help assess the fortunes of the City, taking a regular check on its pulse through public transport usage, bar and restaurant openings, commercial property prices and jobs.
“At the beginning it is difficult to assess the true impact of what is happening because it is quite a confused picture,” said Tom Kirchmaier, a professor who focuses on banking at the London School of Economics.