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London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

  • Henry Ridgwell

Shoppers walk in a BHS store in London, July 25, 2016. The so-called Brexit means the city could lose its right to sell services tariff-free across the European Union, risking its position as Europe’s financial headquarters.

Shoppers walk in a BHS store in London, July 25, 2016. The so-called Brexit means the city could lose its right to sell services tariff-free across the European Union, risking its position as Europe’s financial headquarters.

By most measures, London rivals New York as the only true global city. But Britain’s vote to leave the European Union, the so-called "Brexit," means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters.

The prospect of leaving the European Union, and with it access to the prized single market of 500 million people, has sent shivers through the city of London. Already some banks, including global giant HSBC, have said they may shift operations to the European mainland.

David Slater of promotional body London and Partners said the new government in Britain must maintain London’s primacy.

“This is about the negotiation [with the EU]. The mayor of London has made clear, as has the prime minister, that we want to negotiate continued access to the single market.”

But other EU leaders insist Britain cannot have access to the single market without freedom of movement. Concern over immigration was the core issue that drove the "Leave" campaign to victory.

So with Britain seemingly on its way out of the single market, other cities are eyeing London’s position as Europe’s leading city.

Along with Frankfurt in Germany, Paris is among those best placed to steal a share. The French government recently spoke of "rolling out the red carpet" to firms fleeing Brexit, promising to make its tax regime for expatriates the most favorable in Europe.

Arnaud de Bresson is from the French corporate events firm Europlace, which recently staged a post-Brexit conference on foreign investment in Paris.

"If you compare the situation to 10 years ago, the situation has completely changed. The French corporations operate a major part of their activities in the global world," he said.

London is currently Europe’s leading hub for tech industries, with more than 3,000 start-ups based in the city. Many are around the so-called "Silicon Roundabout" in the central-eastern district of Old Street.

FILE: Buildings surround the Old Street roundabout dubbed "Silicon Roundabout" in London, May 28, 2013.

FILE: Buildings surround the Old Street roundabout dubbed "Silicon Roundabout" in London, May 28, 2013.

Berlin spies an opportunity: It is already Europe’s second-biggest tech city and the real estate is far cheaper than London.

Lukas Kampfmann is from the start-up hub Factory Berlin, home to global tech firms, including the music website SoundCloud.

“With Brexit, London has more or less taken itself out of the race. And we do believe that over time the advantage of Berlin will grow and more tech start-ups will come to Berlin,” said Kampfmann.

In a recent article, The New York Times rated Amsterdam as best placed to steal London’s crown, thanks to its global connections, English-speaking population and attractiveness to expatriates.

But London’s proponents insist the city will remain number one.

“Because the people that do the business and have the expertise want to remain here, and the government and the Mayor of London will do everything they can to keep them,” said David Slater of London and Partners.

London contributes nearly a quarter of Britain’s national income. The Brexit vote has plunged the country into uncertainty, and rivals in Europe are watching with interest.

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