Investment community offers views on Brexit impact
Brexit will see London lose relevance as a financial center and Frankfurt is the European city most likely to benefit from the change, according to a new survey of investors and equity analysts conducted by IR Magazine.
The research, which polled 150 members of the buy side and sell side based in Europe, finds that 60 percent expect London to decline in importance as a financial center following the UK’s decision to leave the European Union.
The survey asked respondents who think London will lose importance to name other locations that will gain from Brexit. Of those responses, Frankfurt received the most mentions, cited by 40 percent, followed by Paris at 27 percent and Dublin at 13 percent.
‘Several different cities across Europe will become more important as London’s dominance diminishes,’ comments one respondent to the survey, a member of the sell side based in Austria.
London’s role as the key financial center of Europe is at risk from Brexit as the UK could lose its ‘passporting’ rights to operate in other EU countries. Earlier this year, Brussels-based think tank Bruegel estimated the UK could lose 30,000 finance sector jobs after Brexit.
Dublin scored a victory over other locations this week when US bank JPMorgan announced the purchase of a new office building in the city. The bank says the purchase is to support its thriving business in the Irish capital, but commentators point out it could be used to relocate staff as a result of Brexit.
When asked which sectors will be most affected by Brexit, respondents to the IR Magazine survey agree the finance sector is most at risk from the impending divorce, with 50 percent mentioning financial services, 16 percent citing consumer goods and 14 percent saying industrials.
‘The finance sector will feel the brunt of it as it will have a big impact on major banks, brokers and hedge funds. There is no doubt it will be disruptive – but also very interesting,’ says a Germany-based member of the sell side.
The full results of the survey, which includes further questions on the impact of Brexit on stock markets and how companies should communicate with investors over the issue, appear in the summer issue of IR Magazine.