London would struggle to compete with New York after Brexit

Brexit, UK, European Union, EU

The UK would be unable to support London as a global financial hub under a Brexit scenario in the same way the US supports New York, according to a new report from the Economist Intelligence Unit.

Unlike London, New York enjoys a “domestic financial hinterland”, according to the Out and down: Mapping the impact of Brexit report, with an economic output of $17.4trn (£12.34trn) and a population of 319m.

In contrast, the UK’s economic output is $2.7trn (£1.9trn), about 3.9 per cent of global GDP, and it has a population of approximately 64m, which is around 0.9 per cent of the global total.

For decades the cities have been the only true global financial hubs, the report states.

It is unlikely the EU would offer “unfettered” access to the single market if the UK voted for a Brexit, the report says, pointing out that Norway and Switzerland do not enjoy full passporting rights.

As well as international businesses using London as a base for operations in Europe, the report says many companies from continental Europe use the UK as a base for their non-domestic operations.

Frankfurt and Paris would likely view Brexit as an opportunity to develop as financial services centres, recruiting continental European talent currently working in London who would be forced to relocate due to tighter immigration rules.

However, the report says a shift of headquarters does not mean all jobs would be forced to shift to a new location, as many roles could be performed remotely.

Further to the economic impact of Brexit on the UK’s financial services sector, the report says the UK has been able to shape globally-significant legislation, such as Basel III, through its EU membership.