How Brexit Damaged the United Kingdom and the City of London

Abstract

Abstract This paper examines the economic cost of Brexit for the City of London. Even though the Covid pandemic may have delayed some plans for relocations by financial firms from London to the EU, the EU’s finance hubs are growing. Paris has become the bloc’s top trading hub, while Frankfurt, Dublin and Amsterdam are also emerging as hubs for different financial services specialisms. There were three drivers behind the UK government’s stance on Brexit which have been largely detrimental to City of London interests: First, Getting Brexit Done by concluding a boilerplate agreement on goods, while neglecting financial services; second, leaving the single market and ending freedom of movement making a deal on financial services impossible, and third, the false and arrogant mantra that ‘the EU needed the City more than the City needed the EU’. Prime Ministers Johnson, Truss and Sunak have led the UK into further self-inflicted economic and political decline and regulatory uncertainty. Brexit will over the next few years have a negative impact on jobs and tax receipts. The City of London will have to adapt to the harsh realities of a hard Brexit, perennial tensions with Brussels and growing competition from European financial centres and from New York.