London’s financial district, A/K/A “The City”, remains as one of the world’s only two major financial capitals, after Tokyo (on-going economic stagnation) and Hong Kong (Beijing’s interference) have lost their luster. London is the primary source of financial services for the European Union. And, due to its location and the openness of its society, the UK is a much more comfortable place for many foreigners to do business, as compared to Paris or Frankfurt.
Just within the City, there are more than 100,000 highly paid financial professional who are employed, along with tens of thousands of workers at ancillary businesses. The financial services sector, including other locations within the United Kingdom, generates some 80% of the overall GDP of England. So, what is the Plan B for when the UK leaves the EU? What are London’s options? How and where will the EU establish a new financial capital from which to execute the millions of daily transactions, and money management services, now provided within the City? How long will the transition take, and what might the downside be?
There have been suggestions floated as to how London might reinvent itself; however, so far nothing mentioned appears to be worthwhile. Keep in mind, however, that this is much too soon after Thursday’s vote, and UK will not actually finalize its exit from the EU until sometime in late 2018. The primary question at this time is: How accommodative does Brussels wish to be, or vindictive, or even be panicky? A smoothly operating financial services sector is the lifeblood, which is necessary for the efficient operation of any economy—especially a complex global one.
Many management decisions, going forward, will have to consider the effects of the Brexit. Most new plants and facilities expansion, for companies primarily doing business with EU Members, will undoubtedly be constructed on the Continent. Citizenship and language proficiency will also come into play for personnel decisions who will be assigned on the Continental. And, many of those currently working in The City, are French citizens, or those of other EU nations. Those will probably be among the first to be transferred back home, or elsewhere in the EU.
Much of the financial services sector in London is co-located with various departments within their own organizations, or within close proximity. It would be inconceivable to expect to re-create that closeness, on a large scale, within an existing metropolitan city. Therefore, It might take a decade, or maybe two, before a properly functioning financial center is operating within the European Union. And it will take a gradual transition.
NOTE: For information regarding whether the Referendum is actually binding, the answer is: legally NO, but politically, it should be honored. For more information along those lines, I have linked an article from Bloomberg: http://www.bloomberg.com/news/articles/2016-06-25/can-brexit-be-overturned-what-brits-are-asking-each-other-today.