Merkel seeks to capitalize on Brexit as ‘London crumbs could become Frankfurt’s cake’ | UK | News

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 Merkel seeks to capitalize on Brexit as 'London crumbs could become Frankfurt's cake' |  UK |  News


Brexit negotiations with the EU resumed in mid-January, with talks on financial services. After months of wrangling, new trade rules were finally agreed on Christmas Eve, but in a more than 1,200-page document, little was said about financial services: a sector that accounts for seven percent of the UK economy and 10 percent of its tax. Received. The two sides hope that a “memorandum of understanding” will be in place by the end of March.

According to Lee Rotherham, the former director of special projects at Vote Leave, there’s a simple explanation why the deal didn’t include a deal for financial services.
He said: “Overall the Services section appears to be an average FTA, allowing activity up to a point.

“It should be remembered that of the so-called ‘four freedoms’, [Services] is the area least pursued by the EU. ”

He noted: “The UK wanted it; the Germans and the French wanted to concentrate on goods, which was to their economic advantage. ”

It’s no secret that the bloc’s main hubs, such as Frankfurt and Paris, have attempted to use Brexit to mark the end of London’s status as one of the world’s major financial hubs.

After the 2016 EU referendum, Thomas Schäfer, Finance Minister of the State of Hesse, who includes Frankfurt, tried to persuade foreign banks to move to Frankfurt after Brexit, and explained how the most Europe’s large economy wanted to strengthen its financial capital at the expense of London.
So far, cities like Frankfurt, Amsterdam, Dublin and Paris have each captured some of the changes.

Some of these changes, like stock trading volumes, happened overnight.

In other areas, like employment, the drift has been slower as businesses and individuals grapple with which city in the changing post-Brexit landscape is best for them.

However, none have yet emerged as the clear winner and there seems to be widespread recognition that the city is likely to remain dominant for the foreseeable future.

London retained second place in a respected international study of financial centers, despite the double whammy of Brexit and the COVID-19 pandemic.

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There is, however, a consensus from Frankfurt, Paris and Dublin that opportunities exist to attract vulnerable sub-sectors from the UK.

Even if a relatively small proportion of the city’s activities are located in the EU’s alternative financial centers, this could have important implications for the remaining Member States.

As a Deutsche Bank report from October 2016 put it: “London crumbs could become Frankfurt’s cake.”

Mairead McGuinness, the bloc’s financial services commissioner told reporters in March: “We will have Frankfurt, Amsterdam, Paris and Dublin all in the mix to take part of the financial system.

“The markets will decide this and are probably in the best position to do so. ”

According to a study by New Financial, 40 companies have so far chosen the German city as the new EU hub, mostly large international investment banks, and 3,500 roles have come due to the ‘Brexit effect’. “.

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Hubertus Väth, Managing Director of Frankfurt Main Finance, expects around 5,000 jobs to eventually be created.

Frankfurt is also taking advantage of a growing trend of dealmakers leaving London across the EU to get closer to local customers.

Kristine Braden of Citigroup said: “London has long been a center for industry and specialty product teams.

“Some members of these teams are moving to be closer to their customers after Brexit.

“We will see this trend continue with more and more bankers.”

Patrik Zeigherman, Head of Investment Banking Germany and Austria at Nomura, added: “I realized how useful it is to be local after spending around 25 years dealing with German clients. from overseas, when I lived in New York and London. ”

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