The City of London made no secret of the fact it wanted Britain to stay in the EU. Financial institutions had lent their weight to the Remain campaign, arguing that the economy would suffer in the event of Brexit.
London is viewed as a global entry point into the EU for financial services, but that relies heavily on UK-based financial entities being able to “passport” their services within the European Union under the rules of the Single Market. If the UK loses its financial passporting rights, then it could make the City less attractive for international banks and financial institutions.
Already some analysts are arguing that Dublin, Frankfurt, Luxembourg, Amsterdam, and even Paris stand to benefit from Brexit. Of these, Frankfurt seems to best-placed. Germany is the largest economy in Europe, and Frankfurt is its financial centre, with excellent transport links to Europe and the world. It’s already home to the European Central Bank (ECB), the Bundesbank, and large financial firms like Commerzbank and Deutsche Bank.
We had a comment sent in from Adri, predicting that, after Brexit, the financial centre of Europe will move to Frankfurt. Is he right?
To get a reaction, we put Adri’s comment to Alfons J. Weichenrieder, Professor of Economics and Public Finance at the Goethe University Frankfurt. Did he think Frankfurt could take over from London as Europe’s financial hub?
I think that some financial activity within Europe will move, but not necessarily the whole financial centre. I do think that some branches and some activities will move, but that London will stay an important – and probably the dominant – financial hub in Europe.
However, there might be benefits for Frankfurt. It may predominately attract non-UK citizens from the rest of the world, depending on whether the UK is very strict on immigration, which could drive out Asians and Americans towards Paris and Frankfurt. Many analysts believe that such a move would be good for Frankfurt…
After Brexit, will the financial capital of Europe move to Frankfurt? Or is London too well-established as a financial hub? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts for their reactions!