Thursday 5 December 2019

London may lose out to New York in Brexit fallout - Bundesbank boss

Joachim Wuermeling
Joachim Wuermeling

Piotr Skolimowski and Colm Kelpie

The UK's exit from the EU will be a watershed moment for the City of London and weaken its role as one of the world's leading financial centres, a Bundesbank boss has said.

Executive board member Joachim Wuermeling predicted Brexit would lead to higher costs for European companies by reducing the range of available financial services, weaken productivity and reduce market depth.

There is also no guarantee that Britain's departure from the EU would spur an exodus of banks to the mainland Europe, he said.

"London will not, as some have suggested, maintain its current role as the financial centre of the EU after Brexit," said Mr Wuermeling, who is responsible for financial-market operations at the German central bank.

"Even with the best will in the world, there is no substitute outside the EU for the freedoms, rights and obligations that come with being part of the single market."

It is unlikely that any city in Europe could take over London's role after Brexit as they lack London's current heft to handle global transactions, he said, adding that other world financial centres may emerge as the real winners of Britain's divorce from the EU.

"Frankfurt, Paris and Amsterdam are by no means in the second division in this tournament, but neither are they candidates for the Champions League," Mr Wuermeling said in his speech at the Goethe University in Frankfurt.

"New York, in particular, could well benefit from Brexit, as could other global financial hubs such as Singapore or Hong Kong."

Read more: Cross-border trade with UK soars as Irish exports enjoy a record year

In the case of Europe, Brexit could have a negative impact for already fragmented funding channels, and "from the point of view of financial-market efficiency, financial-market integration, financial stability, but also real economic development, a scenario such as this is clearly harmful," he said.

Meanwhile, closer to home, the Sigmar EY 2018 Talent Leaders Pulse Survey results, published today, warns that Ireland is heading towards a major "talent crisis" over the next 12 months.

The survey states that employers predict they will have to offer two out of every three employees pay increases to retain talent this year. (Bloomberg)

Irish Independent

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