The run up to the Brexit vote in 2016 included dire predictions about what leaving the EU would do to the City of London and the capital’s status as a premier global financial hub. Elizabeth Howell argues that whilst London’s international influence has diminished with Brexit, it has generally remained resilient and worst-case scenarios have not (yet) materialised.
The political pyrotechnics that surrounded the 2016 Brexit referendum and its aftermath have gradually dwindled over the subsequent decade. Yet, Brexit was not only a moment in history. It is a continual, fluid process that involves reshaping relationships within a world that has been shifting from a multilateral rule-based order to an unpredictable world dominated by large trading blocs. It is a challenging time for the United Kingdom, which is now, at best, a middle-sized economy.
Within the City of London (the City eludes an easy generalisation and this blog uses “the City” and “London” interchangeably), there was divergence as to Brexit: some sectors supported the Brexit campaign whilst others sought continued access to the EU. Very generally, this reflected Brexit’s varying impact on different sectors and firms. For instance, asset managers and investment funds tended to associate the EU with unpopular reforms that had followed the 2008 global financial crisis whereas wholesale banks tended to rely on London as a hub from which to passport services into the EU.
In light of Brexit, there was then a fight for finance between various European member states that sought to entice business away from London. Yet whilst reconfigurations took place, worst-case scenarios have not (yet) materialised (for instance, one report had identified 5,000 possible staff moves or local hires in response to Brexit). Indeed in 2026 JP Morgan, an investment bank, was reported to be transferring Parisian roles back to London after over-estimating the number of EU-based staff needed to meet post-Brexit rules.
London has remained a key global financial hub. Its position is one that is rooted in its deep history, its geography (including its infrastructure), as well as its legal and regulatory style. Whilst London’s international influence has diminished with Brexit, it has generally remained resilient as a global hub. Political posturing has also been replaced with a degree of pragmatism, and the City has the capacity for gradual adaptation provided it does not overly rely on its legacy.
The past: the City pre-Brexit
During the 19th century London was the world’s foremost international financial centre. Until the first world war, when New York emerged as the leading global hub, London was the financial capital of the world. London’s advantages included its geographic concentration of institutions, firms, markets and lawyers (amongst others). London was also an exception historically. The emergence of the Eurodollar market in the 1960s (very generally, the Eurodollar market enabled foreign currency deposits to be exempt from UK capital and exchange controls, and which could be lent through bank offices in London) and London’s renaissance after two world wars was out of proportion to the country’s economic weight.
The City’s expertise, the diversity and complementarity of its markets, as well as its critical mass of people, all facilitated its success. Indeed, the City depended on its global and open nature – and the British economy depended on the City. In the 1970s and beyond, London evolved into Europe’s investment banker. The “Big Bang” shifts in deregulation in the 1980s transformed London, with the arrival of international financial institutions based in London and New York with offshoots in other centres. London’s crucial benefits included its geographic links with Europe and a business paradigm for finance that was affiliated with America. Even after the arrival of the euro, and the expectation that Frankfurt would be strengthened (including given its proximity to the European Central Bank) London retained benefits that were summed up via London’s competitiveness (this included its critical mass of markets, efficient infrastructure, firms and innovative workers and an attractive environment in which to live).
Yet the euro added a layer of complexity to the UK-EU relationship. The UK, as far as the EU was concerned, was inside the single market but outside the euro. Its position as an offshore financial centre for euro activity caused considerable challenges over time (not least after the 2008 global financial crisis and the eurozone sovereign debt crisis when the UK could react with policy tools that it had retained but which the eurozone had repudiated with the euro’s introduction). This caused considerable difficulties for the government in managing the UK’s membership in the European context. Domestically the UK’s EU membership also caused problems, which once in play, ultimately paved the way for the then prime minister, David Cameron’s, decision in 2013 to promise an “in/out” referendum that resulted in Brexit.
The present: the City in post-Brexit Britain
Finance is like electricity; it enables everything else to happen. Finance is a critical component of the British economy and plays a key role in channelling investment into other sectors. Since Brexit there has been a particular political focus on the promotion of finance. In the early years this was intertwined with ideas about a “global Britain”. More recently it is evident within the UK government’s growth strategy, which highlights financial services as a key area. Yet this direction of travel was always likely as Britain adjusted to the post-Brexit landscape and re-focused its priorities. More prosaically, despite the political rhetoric, the reality has been of a gradual and expedient refuelling of the City, including via adjustments to the UK’s financial regulatory framework. There has also not (yet) been a great “race to the bottom”: one of the reasons that global financial institutions and their regulators permit large operations to exist in Britain is the perception that its market is appropriately regulated.
A particular aspect of the government’s post-Brexit plans to facilitate growth via financial services concerns fintech. Whilst fintech is often regarded as a recent fusion of finance and technology, it has a long history, including the development of the telegraph, the ATM, as well as a burst of new innovators after the 2008 global financial crisis. Fintech ecosystems tend to concentrate in cities with pre-existing technology and financial services sectors, and London’s ecosystem offers an example where firms and employees build enduring relations and where clustering fosters the creation of new innovative technologies. London’s geography and its supporting infrastructures are crucial variables. In the modern world, key global hubs benefit from geographic clustering and close connections between large groups of people and firms create more opportunities for facilitating the transfer of information and knowledge.
One post-Brexit illustration within this ilk concerns the UK’s digital securities sandbox (DSS): a means of enabling industry to experiment with developing technology with respect to the trading and settling digital securities via a modified and flexible legal regime. The DSS is a pragmatic and versatile tool. The Bank of England and financial regulators have been working to expand the range of settlement assets to include regulated stablecoins, whilst the government has been exploring how developing technology can be applied over the lifecycle of the UK sovereign debt process. The DSS should also be read in conjunction with wider initiatives including the Bank of England’s synchronisation lab, which tests how payments in central bank money can be synchronised with transactions on innovative technology. Indeed, the wider question as to who designs and governs the “settlement rails” of digital assets has become a central one in relation to the future distribution of monetary power.
Sandboxes are not a panacea: they require considerable resources and can fail to fully recreate market conditions. The DSS comes with its own perils: hand-in-glove collaboration with industry can give rise to regulatory capture concerns and there is a delicate balance between supporting innovation and regulating it. Yet sandboxes facilitate learning and trust building, and the UK’s financial regulators have a reputation for being procedurally correct as well as committed to supporting innovation in a “safe” fashion.
The future: the City’s role within the UK
Writ large, London’s strengths are not a “thing” that can be taken by another global centre. While post-Brexit London is not as important or as big as it used to be, it still has specialised strengths. Step-by-step adjustments are observable including those which facilitate experimentation and innovation within defined parameters. This is an approach reinforced by London’s deep history, its geography, as well as the law and its accompanying architecture.
Brexit may have demonstrated that it is tricky to destroy an international financial centre, yet deep questions remain with respect to the domestic context, including with respect to tackling a “geography of discontent” within the UK. This includes concerns regarding the UK’s over-dependence on the City, the question as to financial services position within regional and with respect to the UK’s broader economic growth.
Elizabeth is the author of a forthcoming book: “Reframing the UK’s International Financial Relationships”, (Oxford University Press).
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