City of London Is Imploding as a Financial Center as Brexit Looms

Jan. 8, 2019 (EIRNS)—The consulting and accountancy firm EY (Ernst & Young LLP Financial Services) issued a report on Jan. 7 stating that banks and other financial companies “have shifted assets worth at least £800 billion ($1 trillion) from the U.K. to Europe thanks to Brexit,” the Financial Times reported yesterday. The consultancy said the figure represented roughly 10% of the total assets of the U.K. banking sector, and was a “conservative estimate” because some banks have not yet revealed their contingency plans. “Our numbers only reflect the moves that have been announced publicly,” said Omar Ali, head of financial services at EY. “We know that behind the scenes firms are continuing to plan for a ‘no deal’ scenario.”

The Brexit deadline is March 29, and the British Parliament is set to debate Prime Minister Theresa May’s Brexit deal proposal again this week, ahead of a planned vote on Jan. 15. Thus far, no agreement has been possible. A CNN article on the matter reported that

“If May ultimately fails to push the agreement through, the chances of the country crashing out of the European Union without a deal will soar. The Bank of England said the fallout from that scenario would be worse than the 2008 financial crisis. For financial institutions, a no-deal Brexit would be a nightmare. The country’s agreements with EU regulators would cease to exist and banks would find themselves in a legal vacuum, meaning they would be unable to continue doing some of their business across the bloc.”

“London has been Europe’s undisputed financial capital for decades, and is home to the international headquarters of dozens of global banks,” CNN explained. But it is more than that. As EIR has repeatedly documented, the real elephant in the room is the $1.5 quadrillion world derivatives bubble—which is orders of magnitude greater than simple bank assets or obligations. And the world derivatives trade is centered unquestionably in the Square Mile City of London.