On 24th June, Great Britain voted to leave the European Union that led to an unprecedented meltdown in the financial markets all across the world but what would be even more worrying for people involved with the financial district in London is the fact that the city could lose its status as a financial powerhouse up there with New York. According to a report in the Washington Post, "The financial industry has for decades grown - and grown rich - from being the gateway to the EU for banks, brokerages and fund managers from around the world. That has helped it become one of the few truly global financial centers in the world, rivalled perhaps only by New York. Losing that access could mean thousands of jobs are moved away in coming months and, in the longer-run, a steady decline."
In the lead up to the EU referendum, executives of some of the leading banks like HSBC, JP Morgan Chase and others had stated that Britain's exit from the EU or 'Brexit' would be disastrous for the industry. The Washington Post report added, "At the heart of the matter is a principle called "passporting," which currently allows any firm registered in one EU country to operate in any other member state without facing another layer of regulation. It's the same principle that allows exporters to ship their goods to any EU country free of tariffs. Losing that freedom is a particular concern for the many foreign firms who use London not only as a financial hub but as an entry point into the EU. Some 60 percent of all European headquarters of non-EU firms are based in the U.K., according to TheCityUK, which lobbies on behalf of the financial industry. The U.K. hosts more headquarters of non-EU firms than Germany, France, Switzerland and the Netherlands put together."
These are without doubt tricky times in the financial markets and particularly for London, which has long been one of the giants of the financial industry. It remains to be seen how far Brexit puts a dent on its reputation as a financial powerhouse.
