Friday 6 December 2019

Is England's difficulty Ireland's opportunity after Brexit?

Today London banks and insures much of Europe as well as swathes of African and Asian markets. Photo: Chris Ratcliffe
Today London banks and insures much of Europe as well as swathes of African and Asian markets. Photo: Chris Ratcliffe
Donal O'Donovan

Donal O'Donovan

The City of London, a square mile of densely packed streets on the north bank of the Thames, has its own police force, a council elected largely by businesses and a sense of itself dating to legendary lord major Dick Whittington and beyond.

Any given street in the tiny district is liable to feature any-and-all of a length of Roman wall, a Christopher Wren church and a hyper modern sky scraper.

Tens of thousands of senior banking and insurance executives are surrounded by a supporting cast of lawyers, accountants, financial journalists and service providers of every conceivable ilk.

At Smithfield, an historic meat market sits cheek by jowl with blocks housing derivitives and currency traders.

If the doomsayers are right it won't be the only shambles in the City. A vote tomorrow by Britain to leave the European Union could be a devastating blow, sending highly paid jobs to rival centres in Dublin, Frankfurt and Paris - that's what many on this side of the water are hoping at any rate.

In the City, merchants like Dick Whittington once vied with landed barons and the nearby City of Westminster for dominance in England.

Politics is back in the ascendant this week and not just because the result will be market moving in its own right.

Today London banks and insures much of Europe as well as swathes of African and Asian markets.

The heads of big firms like JP Morgan and RBS have warned that work will go abroad if a vote means the UK is no longer part of the European common market for goods and services.

"The City would withstand a Brexit whatever happens, but we think it would be smaller," says Mark Boleat, chairman of the City of London Policy and Resources Committee.

The process of shrinking would be gradual, he says, but substantial.

"Instead of, say, JP Morgan having 90pc of its European operations in the UK it might be 50pc," he says.

Dublin's financial services centre is among those that would be hoping to benefit. The IDA has a watching brief on the Brexit referendum for just that reason, though sources suggest the pickings could be slim, at least initially.

"There is a universal view in the City that Brexit would be desperately damaging, but people find it very hard to be concrete," one veteran of the district who asked not to be named said.

The shock of a vote to Leave would see activity levels in some major financial areas plunge, with echoes of the credit crunch, he said.

People in equity capital markets (ECM) are talking about losing their jobs, not moving them, he said. Financing deals for banks and insurance would also be hit hard, he said.

In that case Ireland, where thousands work in so-called middle and back office functions that support front line bankers in London, would suffer rather than gain post-Brexit.

The City's rivals could end up fighting for a slice of a shrinking pie.

Modern bankers can take comfort from the City's resilience. It's shrugged off the loss of empire and rise of the euro.

Their days continue to be punctured by the bells of St Mary-le-Bow and St Clements, names from a nursery rhyme for most of us.

Brexit could be an opportunity for Ireland, but if we're hoping the bells toll for London's finance sector, it could be a wish we'll come to regret.

Irish Independent

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