Asset management has been listed as a financial services sector that is being viewed as “low hanging fruit” in Brexit negotiations by existing European Union financial centres like Frankfurt, Paris and Dublin.
Other vulnerable sectors are euro clearing and fintech, the Sheffield Political Economics Research Institute analysis says.
Credit ratings agencies and the European Banking Authority are also described as “low hanging fruit” for the three cities, which are described as “alternative financial centres”.
The paper, Frankfurt, Dublin and Paris: Post-Brexit Rivals to the City of London?, states that asset management oversees £7trn and employs 50,000 in the City, but is vulnerable to the loss of passporting.
Paris and Dublin are particularly well placed to attract asset management activities the paper says with the former already managing €3.6trn, making it the second largest centre after London. Dublin is likely to benefit due to being an English-speaking centre and having a low tax regime.
The research says private actors in each city are not only seeking to attract businesses from the UK, but also to use Brexit as a bargaining chip to encourage their country or the EU more widely to adopt friendlier regulation. The paper adds that fear about business being lost to New York is also driving this push.
The paper, which argues the City will remain the dominant European financial centre for the foreseeable future, is based on analysis of 150 policy documents released by each of the three centres since last year’s referendum.