Far from stifling the City of London, EU membership has provided the City with substantial benefits allowing it to be one of the leading international financial centres in the world.
- The City of London is thriving. It is Europe’s leading financial centre, generating 8% of the UK’s national income. Half of European investment banking is conducted through London, which also acts as Europe’s leading hub for insurance, the Eurobond market, the management of sovereign wealth funds and private equity funds, Islamic finance, legal services, and management consulting. Specialised financial and professional services cluster together in the City, providing employment for skilled workers, and providing a significant economic boost for the surrounding economy.
- The financial services sector is one of the most integrated sectors in the EU. EU membership provides the City with access to the Single Market, allowing London-based financial firms to benefit from free movement of capital within the EU, reducing transaction costs and promoting growth. The Single Market also allows free movement of labour, which helps in enlarging London’s pool of skilled labour. London’s openness to international workers is viewed as a key strength by businesses locating in the City.
- The Settlement contains provisions to ensure that UK-based financial institutions are not disadvantaged by aspects of legislation directly linked to the functioning of the euro.
- These benefits would be at risk if the UK were to leave the EU. For example, although London is currently the leading hub for euro-denominated wholesale banking, Eurozone countries and institutions have indicated a preference for this activity to move to the Eurozone to be overseen by the ECB. The likelihood of this happening would increase if the UK exits the Eurozone.
In written evidence to the Parliamentary Commission on Banking Standards, Goldman Sachs and JPMorgan noted the importance of EU membership to the UK financial services industry:
“We believe that a key risk to London’s retaining its status as a financial hub is an exit by the UK from the European Union. In common with financial institutions across the City our ability to provide services to clients and engage in investment activities throughout Europe is dependent on the passport that London-based firms enjoy to operate on a cross-border basis within the Union. If the UK leaves, it is likely that the passport will no longer be available, thereby forcing firms that wish to access EU markets to move their operations to within those markets”.
“We value the flexibility London offers as a platform for access to the Single Market in a variety of formats. Our trading activity in London benefits from an EU passport across the EU.”
- The City UK, Key Facts about the UK as an International Financial Centre, 2014 – https://www.thecityuk.com/research/key-facts-about-the-uk-as-an-international-financial-centre-report-2015/. ↑
- All Party Parliamentary Group for European Reform, Inquiry into the EU single market in services, October 2013 – http://webcache.googleusercontent.com/search?q=cache:gp8ij030tbcJ:archive.openeurope.org.uk/Content/Documents/Pdfs/APPGreportservices2013.pdf+&cd=1&hl=en&ct=clnk&gl=uk. ↑
- British Influence, Brexit: What would happen if the UK voted to leave?, report by Publitas, page 44 – https://view.publitas.com/british-influence/brexit-what-would-happen-if-the-uk-voted-to-leave. See also British Influence, The British Influence Scorecard 2015: What influence does Britain have in the EU?, report by Publitas – https://view.publitas.com/british-influence/2015-scorecard/page/18-19. ↑
- City of London Corporation, Research Periodical, The Future of the City of London’s Economy, June 2015, page 29 – https://www.cityoflondon.gov.uk/business/economic-research-and-information/research-publications/Documents/Research-2015/The-future-of-the-City-of-London-Economy.pdf. ↑
- European Council, European Council meeting (18 and 19 February 2016) – Conclusions – Section A: Economic Governance, EUCO 1/16, Brussels, 19 February 2016, page 13 – http://www.consilium.europa.eu/en/meetings/european-council/2016/02/euco-conclusions_pdf/. ↑
- http://www.global-counsel.co.uk/system/files/publications/Global_Counsel_Impact_of_Brexit_June_2015.pdf. ↑
- Goldman Sachs International, written evidence to the Parliamentary Commission on Banking Standards – http://www.publications.parliament.uk/pa/jt201314/jtselect/jtpcbs/27/27iv78.htm. ↑
- JPMorgan Chase & Co., written evidence to the Parliamentary Commission on Banking Standards – http://www.publications.parliament.uk/pa/jt201314/jtselect/jtpcbs/27/27iv78.htm. ↑