Resilience or relocation? : expectations and reality in the city of London since the Brexit referendum

The fate of British finance following the Brexit referendum revolves around the "resilience or relocation" debate: will the City of London continue to thrive as the world’s leading financial centre or will the bulk of its activity move to rival hubs after departure from EU trading arrangements? Despite extensive commentary, there remains no systematic analysis of this question since the Leave vote. This paper addresses that lacuna by evaluating the empirical evidence concerning jobs, investments, and share of key trading markets (between June 2016 and May 2020). Contrary to widely held expectations, the evidence suggests that the City has been remarkably resilient. Brexit has had no significant impact on jobs and London has consolidated its position as the chief location for financial FDI, FinTech funding, and attracting new firms. Most unexpectedly, the City has increased its dominance in major infrastructure markets such as (euro-denominated) clearing, derivatives, and foreign exchange – although it has lost out in the handling of European repurchase agreements. Based upon this evidence, the paper argues that the UK’s negotiating position is stronger than typically recognised, and outlines the competitive ramifications for both the UK and EU financial sector.