Wise Words from Sir Jon Cunliffe, let's hope the EU is Listening
Sir Jon Cunliffe’s comments in The Times today hold out the hope that, despite all the sabre rattling from certain European quarters, the European Union would be unwise to try and destroy the City of London’s position on the global financial stage. Sir Jon commented “Europe would shoot itself in the foot if it tried to dismantle the City of London in Brexit negotiations”. He also made the point that any attempt to do so would cause suffering in Brussels as well and London.
It is certainly to be hoped that there is no such attempt as the City based financial services sector pays £66 billion in tax, which makes a crucial impact on the British economy and exports £51 billion more that it imports.
The likelihood of being able to replicate the complexities of the City’s financial district in any other European city are slim, despite the French flagging up an interest with Françoise Hollande expressing the desire for the clearing of euro-denominated contracts to be moved to the single currency area. New York is the only place that comes close to the City’s financial capacity, but both financial districts have taken a considerable number of years to establish and are far more complex than they appear to be at first glance.
Even with the most benign Brexit there will be changes and there is divided opinion as to what Britain would lose. Former governor of the Bank of England, Sir Charlie Bean, believes that the City would lose clearing. Whereas Sir Jon is not so sure, pointing out that at least three quarters of the clearing carried out in the City is in dollars with only a quarter in euros and that fracturing the “multi-currency infrastructure” will only lead to a rise in costs which will have an impact all over Europe as well as in Britain.
Brexit changes cannot be avoided and some banks are apparently considering moving their headquarters related to certain sectors of their business but there is a slightly higher level of optimism in the City in light of Sir Jon’s viewpoint.
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