What effect will Brexit have on London?
London is at the centre of the UK’s financial and business services sectors, what effect Brexit will have on London will be a vital question for many businesses in the UK and indeed Europe.
- What are the benefits to the financial services industry to remain in the UK?
- Matching: Reducing search frictions in the labour market, making it easier for different types of worker and firms to find each other, and therefore increasing the likelihood of a productive match
- Learning: Providing greater opportunities for people and firms to exchange ideas and information, known as ‘knowledge spillovers’, both through vertical learning (e.g. when firms learn best practices from their competitors through observation) and horizontal learning (e.g. when firms adopt innovations from their suppliers or gain market information from their customers)
- Sharing: When large numbers of firms or workers benefit by drawing on a common pool of resources (e.g. sharing of public goods and/or infrastructure such as heating or public transport) or by investing their resources in joint ventures to mitigate risks or increase expected returns (e.g. joint R&D efforts)
- Brexit: What happens if a deal can’t be reached?
- Relocation considerations for businesses post-Brexit
- What makes London a great place to live and do business?
- London has the highest-talent population in the world with a higher proportion of graduates than any other major city, underpinned by more world-leading educational institutions than anywhere else and an environment that attracts talented people from around the world
- London is the leading global hub for business, with more large international subsidiaries located here than any other city in the world, lured by a business-friendly environment and access to a global network of opportunities
- London holds the strongest position in financial and professional services, a combination that has driven impressive jobs and GVA growth.
- London is a world-leading centre for technology, creativity and entrepreneurship, benefiting from the rich and mutually supporting connections between its positions in technology and the creative industries
- London is the global capital for international tourism, the most visited city in the world
- Does Brexit put any of these factors at risk?
- International businesses may be discouraged from investing in London due to the uncertain economic environment in the short term
- Talented individuals may be put off from working given uncertain immigration rules and/or reduced potential for career development and experience, if London is no longer servicing the world’s largest single market
- The mobile nature of the financial and professional service sectors makes the UK’s exit from the EU a particularly significant challenge, the scale of which will largely depend on the precise arrangement around access to the Single Market, coupled with the rules over movement of people
- A major risk for London’s status as an international business hub is that a small number of decisions may cause London’s access to diminish, causing material economic loss
- How do we mitigate these risks?
- A British approach to immigration which ensures that business continues to have access to the talent the country needs, combined with a much more effective focus on improving our citizens’ education and training
- Full access to the European single market, so that British business can continue to trade in both goods and services on a level playing field with our largest export markets
- Continue the benefits of the customs union, to ensure frictionless movement of goods and services between the UK and the rest of Europe and, in particular, to ensure no hard border between NI and Eire. This can complement a more vigorous approach to driving trade globally
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