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Brexit Puts London's Finance Jobs At Risk

Dec 22, 2017
Originally published on January 3, 2018 2:30 pm
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This next story is about fear and opportunity - fear that Brexit could damage one of the world's top banking centers - we're talking about London - while handing opportunities to rival cities in Europe. As NPR's Frank Langfitt reports, in the era of Brexit, London's loss is Europe's gain.

FRANK LANGFITT, BYLINE: I'm here in Leadenhall Market. It's a covered market in London, with vaulted roofs and cobblestone streets, in what's basically an area that's kind of the Wall Street of Great Britain. Now within a few miles from here, there are 250 foreign banks and about 750,000 finance jobs. Brexit's putting some of those jobs at risk. And that's because after the U.K. leaves the EU, officials there say the United Kingdom just isn't going to have access to the vast European financial market. And European countries, even small ones like Luxembourg, well, they're already benefiting. I'm meeting a guy named Nicolas Mackel here. He's in from Luxembourg where he runs the government-backed Luxembourg for Finance. Mackel ticks off some of the country's recent gains.

NICOLAS MACKEL: Citibank has announced that it will relocate its private banking operations. Other U.S. operators, for instance, include Northern Trust. As I mentioned also, J.P. Morgan has decided to relocate...

LANGFITT: The Bank of England says that losing access to the EU market could cost the U.K. up to 75,000 finance jobs, as London-based firms set up subsidiaries on the continent. Nicolas Mackel thinks jobs won't disappear overnight.

MACKEL: There will not be a Brexodus (ph) in the sense of masses of bankers leaving London. But it will be a slow erosion of the central role that London is playing in Europe.

LANGFITT: Hello. Hey, John.

JOHN HEFFERNAN: Nice to meet you.

LANGFITT: Nice to meet you, too.

LANGFITT: Over in Luxembourg, John Heffernan sees an opportunity. In October, he opened Home from Home, a grocery store here that sells food to homesick foreign bankers and their families. He's gearing up for more British customers.

HEFFERNAN: Luxembourg sausages are different, and the bacon is very thin. It just doesn't cut the mustard, as far as the English are concerned.

LANGFITT: He shows me a refrigerator full of English double cream, cheddar cheese and pastries.

HEFFERNAN: I suppose, you know, it's comfort food really for the expats. That's how I'd put it.

LANGFITT: How's business going?

HEFFERNAN: Business is up - beyond expectations. So far, we're pleased. Our biggest problem at the moment is logistics and keeping up.

LANGFITT: Twenty-seven finance companies are already planning to open subsidiaries in Luxembourg. But Heffernan's hopes of a Brexit bonanza may may be a little optimistic. Charles Muller of KPMG, the professional services firm, says it's not clear just how much work will actually come here.

CHARLES MULLER: Even if the company comes to Luxembourg - even the funds comes to Luxembourg, it doesn't necessarily mean that all the jobs come to Luxembourg.

LANGFITT: Many other cities are competing for London jobs, including Dublin, Paris and Amsterdam. And some are bullish about the potential gains.

(SOUNDBITE OF SONG, "O COME ALL YE FAITHFUL")

LANGFITT: I'm here at a Christmas market in the heart of Frankfurt, where they're selling everything from waffles to Christmas ornaments. And there's a man in the corner there playing Christmas songs. And there's a sense of celebration in the city these days in part because officials here feel they're going to get thousands of jobs coming from the United Kingdom because of Brexit.

A few blocks away, Sebastian Schafer runs Tech Quartier, an incubator for financial technology start-ups. He says Brexit has become a marketing tool for cities like Frankfurt and helped him recently attract the interest of firms from around the world.

SEBASTIAN SCHAFER: Brexit said just opens up a window of opportunity for other cities in Europe. So before that, it was London. And now I think founders from all over the globe are thinking a little - are considering, you know, different locations.

LANGFITT: Eric Menges is CEO of FrankfurtRheinMain, which promotes the region globally. He doesn't want people to think his city is trying to take advantage.

ERIC MENGES: We are not out there poaching companies, poaching jobs from the UK. And we were among the first to say look. We're not celebrating Brexit.

LANGFITT: But last year's referendum is a gift that could pay dividends across the economy.

MENGES: It could mean additional business for, you know, the hotels, for the restaurants, for, you know, the whole cultural scene. I think Frankfurt can really profit from this.

LANGFITT: To limit the damage from Brexit, the Bank of England has said it would allow certain types of EU banks to continue to operate in the United Kingdom under existing rules, in hopes of keeping their business and as many of their jobs here as possible. Frank Langfitt, NPR News, London.

[POST-BROADCAST CORRECTION: An earlier transcript referred to Luxembourg for Finance as a government bank. In fact, it is the agency for the development of the Luxembourg financial center.] Transcript provided by NPR, Copyright NPR.