Brexit has cost London's financial hub around 40,000 jobs, according to Michael Mainelli, the Lord Mayor of the City of London. This impact is significantly greater than earlier estimates.
Speaking to Reuters, Mainelli emphasized that Britain's exit from the European Union has had a profound effect on London's position as a financial center.
Mainelli pointed out that Dublin has been the biggest beneficiary of the job migration, attracting 10,000 positions. Other European cities like Milan, Paris, and Amsterdam have also gained from London's loss since the 2016 Brexit referendum.
"Brexit was a disaster," Mainelli said. London's financial district, covering a square mile and home to major institutions like the Bank of England, saw its workforce drop from 525,000 in 2016. According to Mainelli, almost 40,000 jobs have been lost due to the fallout from Brexit.
His estimate far exceeds the 7,000 jobs that consultants at EY had previously calculated to have shifted from London to the EU by 2022. However, Mainelli noted that the City of London has compensated for some of these losses, particularly in non-finance sectors such as insurance and data analysis. As a result, the total number of workers in the City has grown to 615,000.
Still, the job losses highlight the significant challenges London has faced since Brexit, as Britain attempts to mend relations with its European neighbors. Mainelli acknowledged the financial district’s overwhelming vote to remain in the EU, with 70% opposing Brexit. Since then, he has intensified efforts to engage with Europe, making numerous visits to EU countries this year.
Britain's broader economic situation has been affected by Brexit, contributing to political and economic uncertainty. While some Brexit supporters believed the departure would lower immigration, simplify regulations, and boost the economy, these expectations have not been met. Instead, immigration has risen, regulatory challenges remain, and economic growth has slowed.
Keir Starmer, the UK’s new prime minister, is working to restore the country’s strained relationship with Europe. Starmer is focused on reducing barriers to trade, such as mutual recognition of professional qualifications, but has ruled out rejoining the EU's single market.
Mainelli also stressed the need for improvements in visa policies to support the financial sector, and he mentioned ongoing efforts to strike bilateral trade agreements with countries like Germany.
The UK's financial sector, once a crown jewel of British industry, has been in decline. Economic output in the heart of the financial sector, which includes banks and wealth funds, has dropped by more than 15% since late 2019, just before the UK formally left the EU. While financial services output has declined by 1% across Britain, countries like France, Germany, and Ireland have seen significant growth in their own financial sectors during the same period.
Furthermore, financial services exports from Britain have been eclipsed by other sectors, such as law and advertising. Britain's official budget forecaster predicted that Brexit would reduce trade volumes by 15%, and recent data suggests that this projection is still accurate.
Although many Britons now view Brexit as a failure, supporters argue that it has allowed the UK greater freedom to chart its own course. They cite economic troubles in Germany and political instability in France as signs of the EU's own difficulties. Photo by GJMarshy, Wikimedia commons.