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London based financial services are a key part of the EU economic infrastructure
Finance in 2018 is people working in a global network of computers, talking to each other via a global telecommunication system. Firms can become a node in this system by paying the money to plug in, the Mizuho Financial Group could totally shut down their London operation Friday night and seamlessly re-open in Frankfurt or Dublin or Paris or all three together on Monday morning.
Physical location is almost irrelevant.
Regulatory location is absolutely relevant.
The City is 3 times larger than the UK economy needs or can support. The extra is there because it was easier to expand already existing offices handing Eurodollar business when the UK's $2.6 trillion (US) economy joined the EU's making a total $18.7 trillion (US) economy. Further, while the EU economy will no doubt take a hit the cost of Brexit to the UK economy will be staggering meaning the UK will need even less Finance. Since the Finance firms are looking being locked-in to an ever shrinking $2.6 trillion economy or being locked-out of a $16.1 trillion economy ... the decision becomes easy.
Now throw in the standard - Patent Pending, all Rights Reserved - May governmental incompetence
Yes, London's financial services are currently a key part of the EU's economic infrastructure that won't last 3 seconds past Brexit. In fact I expect firms to continue shifting their operations to EU sites.
Note: Goldman Sachs pronouncements of staying are, IMO, being driven by the fact they are building a .1 million square foot office in London scheduled to open in 2019. And despite what GS said in the previous quote:
Goldman said on Monday that Brexit could "materially adversely affect" how it operates businesses in Europe and could require it to restructure some of its operations.
Frankly, I view that as a benefit cos the City are a parasite on the UK, it sucks away the oxygen of any debate on all other aspects of the UK economy.
Even multi billion pound infrastructure developments such as CrossRail2, HST2 and Thameslink 2 are all about the City, while transport and economic advancement in the north of England wither for the lack of a few million.
However much it hurts the economy, that's one thing that will make the UK a better place in the long term
keep to the Fen Causeway
But the most important implications from a political point of view is that tax revenues on large scale profits and large salaries will also move deprive the UK Exchequer of a crucial revenue source. In addition the primacy of UK law in settling contact disputes will be challenged and lawyers in EU capitals will be glad to pick up the business. Dublin, with the same language and similar common law legal system to the UK, should target this business in particular. Trillions of $ in financial derivatives require expensive lawyers to broker. Hopefully the oversight will be sufficient to prevent the taxpayer being put on the hook for losses.
Downstream support services, property values, and future investment flows will gradually follow, but the actual employment migration may not be all that great, to begin with, at least. From an Irish point of view I am far more interested in smaller UK industrial and food companies looking to set up smaller EU bases which can be located in smaller rural Irish towns and don't require rarefied skill sets. Despite a return to rapid economic growth, smaller rural towns in Ireland remain depressed, and will not be helped by large financial firms moving some operations to Dublin.
Index of Frank's Diaries
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