Britain’s exit from the European Union has cost London’s financial center about 40,000 jobs, the mayor of the City of London told Reuters. This means that the effects of Brexit are far more serious than previously assumed.
Michael Mainelli said Dublin benefited the most with 10,000 jobs, while cities such as Milan, Paris and Amsterdam also benefited from the exodus of jobs from London after Britain voted to leave the EU trading bloc in 2016.
“Brexit was a disaster,” said Mainelli, the ceremonial head of London’s City financial center, which stretches across a square mile and includes the Bank of England, international banks and insurers. “In 2016 we had 525,000 employees. I estimate that we lost almost 40,000.”
The figures from Mainelli, who followed the fortunes of the British financial center for years before becoming mayor and who has contact with hundreds of companies in the City, are well above the 7,000 jobs that EY consultants calculate will be created in London by 2022 will migrate to the European Union.
But he said the City of London was growing, including in areas beyond finance, with new jobs offsetting the impact of Brexit. The number of employees has risen to 615,000 as the insurance and data analytics sectors grow, he said.
Nonetheless, his estimate underlines the scale of Brexit as Britain seeks to rebuild bridges with continental Europe.
“The city voted 70-30 to remain. We didn’t want that,” Mainelli said, adding that he had redoubled his efforts for “more engagement” in Europe and visited nine countries in the region this year.
His push to strengthen ties with the continent comes amid a broader economic slowdown in Britain, which has been torn by disagreements over leaving the European Union.
Although some had hoped that Brexit would give London the freedom to reduce immigration, scrap much EU regulation and strengthen the economy, immigration rose, regulation proved difficult to untangle and the economy slowed.
Keir Starmer, Britain’s new prime minister, has sought to repair ties with continental Europe damaged by years of Brexit negotiations.
Starmer wants to remove some barriers to doing business with EU countries, including a deal on mutual recognition of professional qualifications, but has ruled out a return to the EU single market.
Mainelli said that “we could do a lot more” with visas to help the city. “We are also working on bilateral trade agreements with Germany,” he said.
The financial sector, long the jewel in Britain’s industrial crown, is also in decline.
Economic output at the heart of Britain’s financial sector, including banks and wealth funds, has fallen by more than 15% since the end of 2019, just before the UK’s official exit from the EU.
Overall, the UK’s financial sector output has fallen 1% since the end of 2019 – a stark contrast to France and Germany, where it rose 8%, and Ireland, which grew 18%, national accounts data shows.
UK exports of financial services have been overtaken by other business services, such as law and advertising.
Britain’s official budget forecaster said in March that his prediction that Brexit would lead to a 15% fall in trade volumes was “broadly on track.”
Recent opinion polls show most Britons believe Brexit has failed so far, but supporters say Britain has more freedom to forge its own path outside the EU. They point to the economic downturn in Germany and the political unrest in France as evidence of the bloc’s shortcomings.
