E Brexit: Impact On City Of London

Brexit has received royal assent, and is now the law of the land in the UK. How will this law impact the center of finance in the British Empire, the Square Mile, otherwise known as the City of London? 

The Square Mile is the backbone of world finance. Its trading platforms and protection of private property are strong. This gives rise to activity that shields wealth from taxation in home nations. From Reuters writer Peter Apps we see this good and bad assessment of London:

As long as the tide of foreign money sweeping into London is one of the factors pushing up property prices, there is relatively little appetite to change anything. At the end of the day, a very large number of people in the capital stand to benefit from London's growing reputation as the centre of the world for the global elite. As long as it remains one of the world's pre-eminent cities, will probably also remain one of its biggest cesspools, too.

So, the City of London, the original Roman Londinium, where the mythical Roman-garbed statues of Gog and Magog "protect" the Square Mile to this day, is the center of world finance for the global elite.

City of London (Square Mile) Skyline © User:Colin / Wikimedia Commons / CC BY-SA-4.0


With Brexit now being the law of the land, how will this center of world finance do as it could lose some access to the Eurozone. My first thought is that it is a big world out there. Not much will stop the Square Mile. Brexit was good for the pound in the long run, because eventually there would have been only one currency allowed in the Eurozone. 

But how will Brexit affect the Square Mile itself? The Peterson Institute tries to put some numbers out on just how it will be affected. Simeon Djankov from the institute writes:

The City of London may lose up to £18 billion in revenue and up to 30,000 jobs by leaving the single market (Oliver Wyman 2016). The analysis in this Policy Brief suggests that these estimates account for about 15 percent of financial sector revenue and 3 percent of employment in the City. Other estimates show similar magnitudes: £14 billion to £20 billion in revenue and 70,000 jobs lost (PwC 2016) or 83,000 jobs lost (EY 2017). According to these estimates, the direct negative effect of Brexit on the financial sector in the City of London will be a 12 to 18 percent loss of revenue and a 7 to 8 percent drop in employment, clearly significant effects.
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Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.

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