LONDON (Reuters) – London’s skyline is changing fast, pierced by gleaming new skyscrapers which defy predictions of a Brexit-related slowdown in the capital’s two financial districts.
Workers are seen crossing London Bridge with Tower Bridge seen behind during the morning rush hour in London, Britain, September 25, 2018. REUTERS/Toby Melville
With only six months until Britain is due to leave the European Union, the terms of its separation have yet to be decided, leaving critical questions over the long-term future of London as the bloc’s pre-eminent financial center.
Some politicians and economists expect the split will damage the City, as the capital’s traditional financial services center is widely known, while Brexit supporters say it will benefit from being able to set its own rules.
Reuters is publishing its third Brexit tracker, monitoring six indicators to help assess the City’s fortunes, taking a regular check on its pulse through public transport usage, bar and restaurant openings, commercial property prices and jobs.
The latest Reuters assessment shows a slowdown in some areas, while others are thriving despite the uncertainty.
“It is certainly an awful lot better than we expected 12 months ago and dramatically better than we expected 24 months ago,” Mat Oakley, head of European commercial research at real estate agents Savills, said.
Although property prices and hiring rates have slowed, the number of bars and restaurants open in the centuries-old financial district are at a record level and financiers still queue at the security scanners at nearby City Airport.
Britain is due to leave the EU on March 29 next year, but there is so far no full exit agreement and Prime Minister Theresa May’s plans for future trade ties have been rebuffed by both the EU and many lawmakers in her own party.
Many business leaders fear that a political crisis could propel Britain into a chaotic and economically damaging split, spooking financial markets and dislocating trade flows.
The latest Reuters jobs review shows just about one-in-ten of the about 5,800 jobs flagged as being at risk of moving out of London or being created in another EU city by the end of March have actually moved, although many firms have taken steps to change their legal structure to enable a swift change if needed.
Jobs leaving London
As few as 630 finance jobs have so far been shifted or created overseas due to Brexit, a far lower number than first predicted, suggesting London will retain its position as one of the world’s top two financial centers, firms employing the bulk of UK-based workers in international finance told Reuters.
The results from a Reuters survey of 134 firms, following up on two previous surveys, show that although companies have made detailed contingency plans they are delaying moving large staff moves until after the outcome of negotiations with the EU on the future trading relationship.
The number of available jobs in London’s financial services industry fell the most in six years in 2018, said recruitment agency Morgan McKinley, which hires staff in finance.
It bases its number on the overall volume of mandates it receives to find jobs and applies a multiplier based on its market share of London’s finance industry.
Reuters obtained property data from Savills, one of the biggest real estate firms in Britain. Savills calculates the value from all-known property deals within the City of London area.
The price of renting real estate in the City of London district fell 6 percent in the first six months of the year, falling to 75 pounds per square foot, from 78 pounds in the third quarter of 2016, Savills says. The rental prices are 1 percent higher than in June 2016 when Britain voted for Brexit.
“The story seems to be that big corporates are planning through any period of potential uncertainty. They are taking a five or more year view because some of these deals that we count as happening today or happening in the first half of the year the tenants are not moving in until say 2022,” Mat Oakley, head of European commercial research at Savills, said.
“I wouldn’t say prices are booming….but they are certainly holding steady.”
Global foreign exchange
Britain has defied skeptics and extended its lead in the global currency trading business in the two years since it voted to leave the European Union.
Reuters analysis shows forex trading volumes in Britain had grown by 23 percent to a record daily average of $2.7 trillion (2.1 trillion pounds) in April compared to April 2016. That was double the pace of its nearest rival, the United States, which was up 11 percent to $994 billion, mostly out of New York.
Some 400,000 journeys are recorded every day at the three main underground stations that serve the City and Canary Wharf.
Reuters filed Freedom of Information Act requests to Transport for London, to get this data, which shows that the number of people using Bank and Monument stations.
The number of passengers using London City Airport, a popular gateway for finance executives, rose to a record high in the first six months of the year.
Bar and restaurant openings
Reuters filed a Freedom of Information Act request to the City of London Corporation to find the number of new premises which have applied for licenses to sell alcohol and license renewals.
The number of venues, such as bars and restaurants, with licenses to sell alcohol in the City of London in 2017 rose 10 percent, data from the municipal local authority shows.
The number of venues applying for new licenses fell slightly compared with 2016, the data shows, although the City of London Corporation said such fluctuations are normal.
(For a graphic on ‘Brexit and the City’ click tmsnrt.rs/2xBCbGf)
Editing by Alexander Smith