London's financial powerhouse says: we'll thrive without EU access but can't be rule takers

Guy Faulconbridge and Huw Jones
·2 min read
Catherine McGuinness, Chairman of the Policy and Resources Committee of the City of London Corporation, poses for a photograph in London

By Guy Faulconbridge and Huw Jones

LONDON (Reuters) - London's loss of some financial business due to Brexit has not been catastrophic and the world's premier international financial capital will thrive even if the European Union "irrationally" blocks access, the City of London said.

London, the only financial centre to rival New York, has seen some business and job losses since the shock result of the 2016 Brexit referendum and financial services were largely forgotten by British leaders during the divorce negotiations, cutting off the City from its biggest single customer.

"It's disappointing to lose business but it's not at all catastrophic," Catherine McGuinness, who is the political leader of the ancient financial district’s ruling body, the City of London Corporation, told Reuters.

"We are very confident in London's basic strengths and that we will make up business elsewhere," McGuinness said. "No matter what happens, London will continue to thrive."

The City, McGuinness said, neither wanted nor expected Prime Minister Boris Johnson's government to light "a bonfire of regulations". Still, a global financial capital the size of London could not be a "rule taker", she said.

London's Brexit job losses so far to the EU were around 7,500, McGuinness said, still at the low end of the range predicted by investment consultant Oliver Wyman which said in 2016 that London could shed 65,000 to 75,000 jobs in a sector that employs a million people.

London dominates the world's $6.6 trillion-a-day foreign exchange market, it is the biggest centre for international banking and the second largest fintech hub in the world after the United States.

New York retained the top spot in a survey of global financial centres published in September by Global Financial Centres Index, with London strengthening its position in second.

While trading in euro shares and some derivatives has left for other European centres - with some to New York - after Brexit, no one European competitor has dominated and so London views New York, Shanghai, Tokyo, Hong Kong and Singapore as its true rivals.

Some elements of the bond, derivatives and capital markets had moved after Brexit, McGuinness said, though London retained by far the deepest capital markets in its time zone.

"We're not looking for a bonfire of regulation, we're not looking for a move away from international standards," McGuinness said. "We're not expecting any major deregulation at all."

(Writing by Guy Faulconbridge and Huw Jones; editing by Kate Holton)