It’s relentless

The media coverage of Brexit is dominated by the...

...twists and turns of daily politics

Will we get a deal Brexit?

Nobody knows the exact cost...

...of risk around the Brexit deadline

It’s drowning out a lot of important stories about the...

...impact Brexit is set to have...

...on Britain, Europe and the rest of the world

We want to get to grips with one of those stories...

...about what Brexit could mean for our financial systems

Ok, so Brexit—a fast moving story

Obviously everyone in this country has...

...huge amounts of Brexit fatigue

Most of the top regions that people are searching for Brexit...

...and information around it...

...most of them are in Europe

There is big research done by the European Parliament...

...called The Eurobarometer

Most of the European countries don’t really want to know...

...about bureaucratic decisions and the intricacies of politics

They are all looking into business, trade...

...and probably this is a subject that...

...really interests people in Europe

How is it actually going to work in terms of economy?

To better understand what’s at stake here...

...we spoke to Chris Lockwood...

...The Economist’s Europe editor

Well it seems to me there’s two sort of ends to it

One is what the effects on Britain are going to be...

...and the other is what the effects on Europe are going to be

The effects on Britain and Europe are very different

I mean the effects are going to be much more severe for Britain than Europe

And that’s worth exploring because Britain has...

...always tried to argue that they need us more than we need them...

...which is obviously complete nonsense...

...based on a complete misunderstanding...

...of the way trade flows work

But then you get into other difficult areas...

...like surrounding the City of London

Financial services, those aren’t trade barriers or they’re not goods...

...but there you’re into whole regulatory problems where...

...because we won't be part of the single market anymore...

...our banks will no longer be treated as being...

...sort of equivalent to European banks

And whereas in the past, if a European country tried to discriminate...

...against our banks and not allow our banks access to bits of their market...

...we could always sue in the European Court of Justice

Now we won’t be able to

Many cities can claim to dominate industries

Silicon Valley in California, the centre of technology

For electronics, head to Shenzhen in China

The leading hub for outsourcing is Bangalore, India...

...and London hosts one of the world’s largest international financial centres

Tamzin Booth has been reporting on business and finance for a long time

She’s The Economist’s Britain business editor

Within just a square mile here on the banks of the Thames...

...companies can do so many things

A multinational can sell $5bn-worth of shares in 20 minutes...

...a startup can raise seed capital...

...from Asian pensioners

A company can insure a pop star’s vocal cords...

...or the risk of a hurricane hitting

So how important are these services for other countries...

...especially in Europe?

Well relations between the City of London and Europe...

...are particularly intimate

French and Italian firms often go to London to meet investors...

...or organise a takeover

Some 90% of European interest-rate swaps...

...are cleared through the City’s plumbing

So the global economy is inextricably linked with London

But Brexit threatens to undermine its global standing

Since the Brexit referendum more than 300 financial firms...

...have decided to relocate or set up shop elsewhere in Europe

And soon thousands of workers from London...

...will be crossing the Channel to staff new offices

They are moving to multiple cities across Europe

Dublin is set to be a hotspot for asset managers

Frankfurt is the bankers’ favourite...

...attracting 43% of bank moves from London

And trading firms are likely to favour Amsterdam

And for all of these cities, new business means new money

By one estimate, £1trn in assets could leave Britain

We wanted to find out how two European cities...

...Amsterdam and Dublin...

...have been honing their sales pitch to lure those assets away from London

Hello

Let me first say that...

...we actually hate to see Britain leave the European Union

So we are not very enthusiastic about that whole idea

But in Amsterdam we have a very good digital infrastructure...

...which is for instance, for fintech companies, very interesting

In Dublin, we’ve been a European financial centre...

...now for more than 30 years

The fact that we’re close to London...

...that we’re English speaking...

...that we’re a common-law jurisdiction...

...really appeals

We have lots of internationally oriented talent

Close to 90,000 people working in the industry...

...both foreign and domestic in Ireland

People speak many languages, which is attractive

And we also have good accessibility...

...in terms of Amsterdam is near the airport

So what does this exodus mean for the future of Europe’s financial system?

Research I’ve been reading from think-tank, New Financial...

...concludes that Brexit will take the entire...

...financial-services industry backwards

Hello, how are you?

Good, very well

Over the past 20 years anything that can be moved...

...to London has been moved to London because...

...it’s so much more efficient for a large bank to run...

...its operations in one financial centre and sell them across border...

...sell them remotely to customers in the rest of the EU...

...than it is to have...

...15 offices with 15 separate management structures...

...sprinkled and spread across Europe

And what Brexit is doing, or at least in part...

...is rewinding some of the progress that has been made...

...rewinding that process over the past 20 years...

...and forcing firms to shift more of their business back...

...to the EU and have a stronger local presence

So what is the future of London?

When you look back over the history of London as a financial centre

...you know it came to dominance because of its unique position...

...as a global financial centre

It helped fund the railway network in what’s now the United States...

...far more so than it helped fund the railways...

...in what’s now France and Germany

So I think we’ll see London sort of moving back...

...to perhaps its sort of...

...its longer-term historical role...

...of being a global international financial centre

London currently ranks 2nd in the Global Financial Centres Index...

...only after New York

The highest euro-zone city is 15th on the list

Cities like Frankfurt and Paris will be catching up with London post-Brexit...

...but they probably won’t overtake

And any gains they do make at London’s expense...

...might prove to be a hollow victory...

...as Tamzin explained

Ultimately for the euro zone...

...the costs of having a less efficient financial system...

...and sort of higher cost of funding are really likely to outweigh...

...the benefits of grabbing some bits of business from the City

The annual bill for every 0.1 percentage-point...

...increase in the cost of euro-zone firms’ funding equates to €32bn...

...or 0.3% of the whole euro zone’s GDP

How is the City of London going to navigate Brexit?

Well the City could keep a lot of its access to the EU...

...if it agreed to be largely regulated by it

But British regulators rightly fear handing a lot of control to the bloc...

...especially if the euro zone’s unspoken goal is to shrink...

...the City of London and really boost Paris and Frankfurt

So as countries across the EU start to weigh the...

...financial consequences of Brexit...

...what about the political conseqeunces?

We’ve been exploring those too...

...and they’re not necessarily what you might expect

The people are slightly more optimistic now, than before

So I think the Italians are trying to hope for a better future for the EU

Obviously nothing is for granted...

...we’ll still have to fight every centimetre...

...of ground to actually defend the European Union

But I feel there is a bit more optimism...

...and that’s a good sign

That was the founder of a new pan-European movement called Volt...

...which features in another of our films...

...exploring how the Brexit vote is changing the EU

You can watch that film if you click on the link opposite

The other link will take you to The Economist’s latest coverage on Brexit...

...and also some of the data and research we used whilst making this film

Don’t forget to subscribe for all of our latest releases...

...and thanks for watching

...other European countries view the EU

I founded Volt because of Brexit...

...Brexit was the first spark that told me...

...that our European values were in danger

I figured that something was needed...

...to try to steer the direction that the UK...

...but not only Europe as a whole was taking

And so the idea of creating something European...

...a European political movement

We dream about a Europe that is more united...

...more cohesive where countries are not left behind

But Andrea has his work cut out for him

That’s actually the start of another film...

...which you can watch by clicking on the link opposite

In it we explore how Brexit has had some surprising effects...

...on anti-EU sentiment

Click the other link if you want to look at...

...The Economist’s latest writing on Brexit

Thanks for watching...

...and make sure to subscribe to get all our latest releases