Consciousness of Sheep
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For an economy largely owned by the City of London, the post-Brexit future of UK banking and finance is an existential concern.
The conventional wisdom is that unless the UK government can negotiate an agreement with the EU to allow the current passporting arrangements to continue then we will see a huge volume of bank business and jobs relocate to Dublin, Frankfurt and Paris.
In an interview with the BBC, Goldman Sachs’ CEO Lloyd Blankfein expressed this view, claiming that the UK banking and finance sector would stall unless the government arrived at a workable deal with Europe.
But things could turn out far worse according to Patrick Jenkins in the Financial Times. Rather than wait around to see how things turn out, global banks may simply abandon Europe and the UK altogether:
“Given the economic fallout from Brexit — by 2020 a 3 percentage point GDP hit in the UK and a 1 percentage point hit in the EU ex-UK, according to the OECD — The focus, then, should not be on the so far small numbers of jobs that banks are set to move from London to Frankfurt, Dublin and elsewhere, but rather on those that will simply be axed in London and Europe generally as costs are better aligned with revenues.”
Put simply, the EU and the UK are no longer the global powers that they once were. With the USA still accounting for a quarter of the global economy and China accounting for more than 15 percent, the UK banking and financial industry looks more like a relic from a bygone age than a key hub in the global economy’s future. If so, then Brexit will prove less a self-inflicted wound than a mercy bullet to put the UK economy out of its misery once and for all.
