How will Brexit reshape the City of London? | Lex Megatrends

Brexit has eroded the City’s position as Europe’s financial hub. From Singapore-on-Thames to a lawless Dodge City, the FT’s Lex looks at how the City will reinvent itself. Read more at:

Lex megatrends city scenarios from singapore on thames to the spires of gaia the city of london has been many things roman trading outpost financier to the british empire and deregulated yuppie playground now brexit is eroding its position as europe’s financial hub the city needs reinventing how do different scenarios stack up the first is repressed rule taker

Odds 30-1 city bosses hoped brexit would bring little disruption the uk would mirror eu financial regulation but the eu is not granting equivalence for city businesses to operate on an equal footing with locals by requiring eu investors to onshore trading and clearing progressively the eu can make lots of non-eu capital switch too before more than half the trade

In eu equities was in london now less than a fifth is the second scenario is singapore on thames odds three to one the south east asia hub serves a whole region just as london serves emea countries it’s also a forum for inter-regional deal making regulation is seen as flexible but muscular singapore is a welcoming city for expat financiers top rate personal

Tax is just 22 corporate tax is only 17 that wouldn’t work in the uk which is raising corporation tax to 25 percent authoritarianism is another singaporean trait the uk wouldn’t copy regulatory style is a bigger deal breaker the uk would need to adopt the agile economically driven approach of singapore’s monetary authority the uk’s slow-moving financial conduct

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Authority would need a heavy overhaul but overzealous deregulation could trigger the third scenario dodge city odds 7-1 the uk may let founders wield extra votes over premium listed companies it could make prospectus rules much lighter and it could tweak solvency requirements for insurers if the uk deregulates too hard bad money would drive out good dodgy cowboys

Would replace honest brokers the uk has some form for laxity it lured listings in the naughties from asian resources groups some of their business practices were as grubby as their polluting products today the city hopes for a green makeover under the fourth scenario the spires of gaia odds five to one raising money for renewable energy businesses is no harder

Than doing it for polluters you just need a critical mass of capital and expertise carbon transition is a good trend for london to embrace it’s complex involves large sums and will take a long time it’s a pity the uk has limited credibility in green finance the government has not issued green bonds yet unlike other big eu countries the uk stock market lacks big

Renewables companies to match denmark’s orested london does have legacy hydrocarbons businesses such as bp and royal dutch shell which financiers can help re-engineer it also boasts a trade in carbon derivatives ice an exchange operates a futures market in european emission permits dealing in the equivalent of 12.2 gigatons of carbon yearly unfortunately trading

Recently moved to amsterdam because of brexit similarly while the uk has some great fintechs the us will attract the listings while valuations and liquidity are higher there irish rooted payments group stripe plans to float in new york for the city to thrive the government must do more than commission think pieces from torrid peers a national financial services

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Strategy is needed margaret thatcher had a plan for the city in 1986. it was called big bang her successors need to rethink london’s financial cluster again things aren’t so bad for the city the refusal to grant equivalents could take the eu down a self-defeating path in the past nationalistic financial restrictions in napoleonic europe and the u.s in the 1960s

Were great for the city the higher the walls a protectionist eu builds to retain and control capital the greater the amount that would go elsewhere thanks for watching to the end

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How will Brexit reshape the City of London? | Lex Megatrends By Financial Times

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