Article written on 07/06/2023 – By Sarah Cantet – Photo : Shutterstock

Some experts think the French financial market could outperform the City of London. Let us give you just of few facts and figures of English financial services power.

Brexit or the outcome of a search for greater independence

Brexit caused a split in European history, but it does not create a shortage with British positions. The latter have always been reserved about the pooling of financial and monetary resources as underlined by Margareth Thatcher’s stance « I want my money back » (1979) but also by the use of the opting-out clause in the Maastricht Treaty creating the euro (1992). However, the City’s financial and banking services were not spared by the divorce. The loss of the financial passport (see Brexit episode 3: the big bluff) raises questions about the permanence of London financial centre on a European and global scale, and indirectly about the aftermaths of gaining more independence.

Will European financial hubs benefit from gains or will these remain in the crown?

Since Brexit, over 440 firms have moved from the UK to the European Union. Dublin’s attractiveness has been strengthened, with 135 firms relocating there. Paris has reinforced its position in the job market and is seeking to assert itself as Europe’s leading financial centre.

At the end of 2022, the French press hailed Paris’s stock market capitalization as surpassing that of London. Nevertheless, while the total value of listed shares is higher in France, across the Channel, the City has a head start in terms of business volume.

With more than $3,700 billion in daily trading, London now accounts for 38% of global currency activity, despite the shock of the European Union’s exit.

Although the City has been overtaken by the Continent in terms of stocks brokerage, the Brexodus – the feared mass exodus – has been limited, leaving it Europe’s leading financial centre. The region remains attractive, with 122 initial public offerings (IPOs) in 2021, worth some £16.8 billion and creating 30,000 jobs.

In fact, according to the Global Financial Centres Index published in 2023, London remains the world’s second-largest financial centre after New York and ahead of Singapore, failing to apply its model (see Brexit episode 6: the exit to Singapore…). Paris (14th), Frankfurt (17th) and Munich (18th) remain behind, as the European Union loses its most developed capital market.

Finance, the key to a united Kingdom?

At the end of 2022, the Chancellor of the Exchequer of Rishi Sunak’s government announced a series of reforms. These aim to stimulate growth and ensure competitiveness, while promoting the development of global cooperation through international partnerships for the banking and financial sectors. These new regulations, driven by Brexit and reinforced by the epidemic crisis, reflect the continuation of government work towards regulatory and independent actions.

Economics and politics are linked and intertwined with the financial sector. Indeed, the presentation of these thirty regulatory reforms in Edinburg, Scotland, raises questions about the will to keep a united kingdom, kingdom exposed to the independence and Europeanist claims of its constituent nations (see Brexit episode 4: birth and death of the United Kingdom). Nevertheless, these legislative projects are debated and not unanimously supported, just like the British monarchy upholding after the accession to the throne of King Charles III.