Euromonitor International’s baseline scenario already incorporates the likelihood (40-50% probability) of a Delayed Free Trade Agreement, where the UK remains in the EU for another two to three years until a deal is reached. The quarterly report examines the impact of a No-Deal Brexit scenario (35-45% probability) on our baseline, alongside the much slimmer prospect of a Light Brexit (5-15% probability).

1. POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH
IN ON LONDON’S FINANCIAL SERVICES EXODUS
December 2017

2. © Euromonitor International PASSPORT 2POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES
EXODUS
 Since the June 23rd referendum in 2016, whereby the UK’s population voted to leave the EU, questions
have been raised as to the extent to which this decision will impact the country’s economic, political and
social standing. With negotiations still ongoing, one of the most contentious issues regarding Brexit
revolves around London’s future as a leading European and global financial centre after the UK withdraws
from the EU.
 In light of Brexit, a grave concern among financial services companies has been passporting rights; that is,
the ability to freely provide cross border financial services to clients based in EU or EEA (European
Economic Area) markets. Banks and other financial services companies have suggested that if passporting
rights are to end, certain operations in London will be transferred to other EU cities as a means to maintain
presence in the Single Market. The briefing provides presents four major EU cities best placed to take
advantage of London’s financial services exodus and potentially become the EU’s chief financial centre.
75,000 jobs in London’s
financial services are
under threat from Brexit
The City of London
accounts for 13% of
London’s output
Financial services
accounts for 36% of the
City of London’s jobs
Brexit; City of London and the financial services industry
POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES EXODUS

3. © Euromonitor International PASSPORT 3POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES
EXODUS
Good business and regulatory environment
Access to markets and financial services
Developed infrastructure and communications
Supply of high quality human capital
English language proficiency
Cultural aspects and high quality of life
Key criteria to becoming a major financial centre
POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES EXODUS

4. © Euromonitor International PASSPORT 4POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES
EXODUS
 Frankfurt is a natural alternative
to London, as it is ranked
second in the EU (behind
London) for its financial centre
competitiveness, according to
the September 2017 Global
Financial Centres Index.
 A number of banking giants,
such as UBS, Goldman Sachs,
Morgan Stanley, Citigroup and
Barclays, have already publicly
expressed their intent to shift
banking operations to Frankfurt.
 However, bearing in mind that
the city is already home to the
European Central Bank, there
are fears that if Frankfurt is to
become the EU’s financial
stronghold, it could further
consolidate Germany’s
dominance in the bloc – an
unsettling scenario for other
states, especially France.
Pros
• Already hosts various EU
regulatory bodies
• English language is widely
spoken
• High quality of life
Cons
• Small city and not known
for its entertainment
appeal
• Quite high corporation and
social security taxes
• Strict labour rules
Frankfurt: EU’s main financial services alternative to London
POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES EXODUS

5. © Euromonitor International PASSPORT 5POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES
EXODUS
 Considering Ireland’s cultural,
linguistic and legal similarities to
the UK, Dublin stands in good
stead to poach London’s
financial services jobs. The
city’s low corporation taxes have
attracted multinationals such as
Yahoo and Google, and are also
a major draw for banks and
other financial services
companies. Barclays, for
instance, has already pledged to
move 150 of its staff to Dublin,
with other major banks,
including HSBC and CitiGroup,
likely to follow suit.
 However, memories of the 2008
banking crisis still linger in the
minds of the Irish regulators,
who have become less inclined
to welcome investment banks
with large trading positions in
risky assets.
Pros
• English as a first language
• Similarity to UK’s legal
system
• Low corporation taxes
Cons
• Undersupply of residential
housing
• Expensive city for expats
• Expensive commercial
office rents
Dublin: Linguistic and cultural similarities boost Irish capital’s bid
POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES EXODUS

6. © Euromonitor International PASSPORT 6POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES
EXODUS
 In terms of size, Paris is the
only real global metropolis
rivalling London in the EU. Its
cosmopolitan flair, coupled with
its eminence as a historical and
cultural melting pot, makes it
one of the firm contenders to
snap up London’s financial
services jobs.
 As a means to further Paris’
desirability, the French Prime
Minister, Édouard Philippe,
earlier in 2017 presented a
document outlining a vision of
making Paris the EU’s leading
financial centre after Brexit. The
document proposed the
introduction of various reforms,
including the abolition of a 0.3%
tax on financial trades.
 HSBC and the Bank of America
have already expressed interest
in relocating to Paris.
Pros
• Large number of
international schools
• Good international
connectivity
• Global city and a cultural
melting pot
Cons
• Resistance to accepting
English as lingua franca
• High income taxes and
rigid labour laws
• High accommodation costs
Paris: A global metropolis analogous to London
POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES EXODUS

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EXODUS
Amsterdam: Strategically located in Europe
POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES EXODUS
Pros
• High number of English
speakers
• Good international schools
• Culturally appealing city
Cons
• Large cap on bankers’
bonuses
• High top income tax rate
• Low office stock
 Amsterdam has been more
discreet its attempt to lure away
major financial companies from
London. The city is renowned
for its rich cultural offerings and
a bustling nightlife scene. It is
well placed geographically and
benefits from excellent
connectivity to other European
cities. Despite its small size,
proportionally, Amsterdam
benefits from a large share of
the working age population.
 The city is known for its strength
in fintech, clearing and high-
frequency trading. In mid-2017,
Japan’s largest bank, MUFG
expressed its intent to shift its
investment arm to Amsterdam.
 However, Amsterdam’s financial
sector is quite small, and since
the 2008 financial crisis it has
declined further in size.

8. © Euromonitor International PASSPORT 8POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES
EXODUS
 The four cities of Frankfurt, Dublin, Paris and Amsterdam are the
main contenders to take London’s financial services jobs, but this is
by no means an exhaustive list. Other cities have similarly asserted
their ambitions of welcoming financial services firms from London.
 Madrid, the EU’s third largest city, has been praised for its
affordability, abundance of office space and favourable climate. The
city also benefits from competitive tax rates. Milan, well known for its
role in the fashion industry, also prides itself on being Italy’s key
business and financial centre. It possesses strong cosmopolitan and
cultural flair, boasting 15 Michelin starred restaurants. Luxembourg
has been touted as one of the dark horses to attain a share of
London’s financial services, especially in private banking. In October
2017, CitiGroup – the US’s fourth largest bank – unveiled plans to set
up an administrative base for its EU private banking clients in the tiny
state.
 Eastern European cities are also in the hunt to house some middle
and back office functions. The Polish government has suggested that
25-30,000 jobs in the business services sector could be shifted from
the UK to Poland. Warsaw is expected to play a front running role in
assuming the largest portion of jobs, with Wroclaw and Krakow also
being considered. Other eastern European cities, such as Prague,
Budapest, Tallinn, Riga and Vilnius, are likewise keen to take some of
London’s lower function jobs.
Others in the mix to seize London’s financial services jobs
POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES EXODUS

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EXODUS
European Banking Authority
moves to Paris
European Medicines Agency
transferred to Amsterdam
 The EU’s two main regulators, the European Banking Authority and the European Medicines Agency, will
see their operations being shifted from their current base in London after a vote by the remaining 27 EU
country representatives in November 2017. The European Banking Authority will be moved to Paris, while
the European Medicines Agency, which oversees the bloc’s healthcare industry, will be relocated to
Amsterdam, as the UK continues its path towards an EU exit.
 Concern has also been raised regarding the future of London’s euro-denominated clearing business, which
is being sought by the Frankfurt Stock Exchange. The business, which deals with foreign contracts worth
USD1.2 trillion on a daily basis, plays an important role in reducing risk across the EU’s financial system.
EU agencies already moving out; could Euro clearing follow suit?
POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES EXODUS

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EXODUS
Moving
operations to
other cities is
very costly
Employees may
not be willing to
leave London
due to familial
ties
London is at the
heart of fintech
innovation in
Europe
Innovative
capabilities and
infrastructure are
highly developed
in London
Moving operations elsewhere has its challenges too
POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES EXODUS

11. FOR FURTHER INSIGHT PLEASE CONTACT
Fransua Vytautas Razvadauskas
Cities Analyst
Fransua.Razvadauskas@Euromonitor.com

12. © Euromonitor International PASSPORT 12POST-BREXIT LONDON: 4 EU CITIES VYING TO CASH IN ON LONDON’S FINANCIAL SERVICES
EXODUS
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