Frankfurt is set to displace London as a global financial centre after Brexit, according to an audience poll at Sibos 2017, however the session’s panellists were not convinced by the results.
In plenary session, focused on the effects of geopolitics on the finance space, 46 percent of voters said they think Frankfurt will be the next big financial centre, while 21 percent voted for Singapore.
Shanghai was selected by 11 percent, while 5 percent voted for Paris, and Chicago and Mumbai scored 1 percent of the vote apiece.
The remaining 15 percent selected 'none'.
When asked whether Britain will regret its vote to leave the EU, one panellist said she is “amazed” we’re still talking about it.
Heather McGregor, executive dean of the Edinburgh Business School at Heriot-Watt University in Edinburgh, noted that London is a huge financial centre, and said: “I don’t think Brexit is going to matter at the end of the day.”
She added that the exit negotiations are too politically significant for any politician to backtrack on, and that the country must move on to secure the “least worse” outcome. She added that, for banks, capital is an international phenomena and will continue to flow across borders.
Another speaker, Tim Adams, president and CEO of the Institute of International Finance, added that there may be some hope for a UK-US free-trade agreement, but warned that this may not come about for some 20 years. The UK doesn’t have “the capacity to negotiate anything in the near term”.
The UK government is moving towards a ‘hard Brexit', and is running out of time to finalise a deal, and firms are already starting to move people and operations out of the country, making “irreversible decisions”, Adams said.
With regards to which city may replace the UK as a financial hub, the panelists generally leaned towards Asia. However, Philippe Le Corre, senior fellow at the Mossavar-Rahmani Center for Business and Government at Harvard Kennedy School, suggested that Shanghai’s claim depends on how open China will become, financially.
He said: “Shanghai has the shape of a financial centre, does it have the heart of a financial centre? I’m not sure”
McGregor added that there is likely to be a “much bigger resurgence in Asia”, particularly noting the depth of talent in China. Chinese students are increasingly studying abroad or at world-class Chinese universities, meaning they have strong practical and language skills, she said.
Adams also noted that a financial hub requires an infrastructure of schools and housing for the workforce, something that is not currently present in Frankfurt. Singapore, on the other hand, offers this, plus a local government that is used to—and good at—dealing with the financial world.
While Mumbai did not score highly in the audience survey, Tanvi Madan, fellow and director of The India Project at The Brookings Institution, conceded that this reflects reality.
She noted that China and India are often discussed together, but that, economically, India is 10 to 15 years behind China and “in a different race”. She predicted, however, that if the audience was asked the same question in five years’ time, that Mumbai would be a much more significant part of the discussion.
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