What was supposed to be a cordial meeting between British Prime Minister Theresa May
and Jean-Claude Juncker, the president of the European Commission,
turned into a diplomatic disaster over the terms of Brexit.
Juncker reportedly found May’s demands to be delusional,
including her assumption that the U.K. would continue to enjoy the perks of the E.U. club without paying dues.
One of those perks is unfettered access to Europe’s financial markets for London’s banks,
a privilege they're set to lose in March 2019.
The breach will create an opportunity for other European cities
that want to steal tens of billions of dollars in business
from London, the financial capital of the world.
That heist is already well under way,
and England’s next-door neighbor is after the crown jewels.
— To see the future-of-Brexit London, come here...
...to Dublin, in Ireland.
— So that’s PWC right in front of us.
So Facebook are just down there.
So this here is AirBnB’s headquarters in Dublin.
That’s Google Land, or G4,
or “Silicon Docks,” as we like to call it.
— The Irish have got some of the biggest names in Silicon Valley.
Now, they’re coming for London’s banks.
— Are you seriously thinking you could become
the European headquarters for lots of international businesses?
— We’re in Europe.
Big U.S. corporates need to have an EMEA HQ,
why not Dublin?
And if we can assist with Brexit and the fallout of it, we will.
On a mutual, kind-of beneficial basis.
— One newspaper even runs a “crane count”:
It’s up to 70, which, in a city this small, is a lot.
These aren’t cheap houses for Irish workers, but pricey offices for multinational businesses.
When Britain leaves Europe in March 2019,
its banks and fund managers will lose their right to trade in the rest of Europe.
So, the Irish government has made it a priority to lure as many refugee bankers as possible.
That’s this man’s job.
Call him Ireland’s Minister for Brexit.
— How much effort are you realistically putting into getting banks into Dublin?
— There is a huge amount of effort going on on behalf of the Irish government,
every part of the government,
to make sure we’re across all of the risks,
but also the opportunities that Brexit presents to the Irish country.
— He wants those fleeing financiers,
and their tax money.
— A number of companies have told us privately that they are relocating to Dublin, or to Ireland,
as a result of the Brexit decision by the British people.
— A number of companies. What number?
— When people ask for firm and hard numbers, it’s very difficult to say for certainty.
But, if you look at one area in particular— for example, insurance.
We can say that five companies have made applications for authorization,
and there are another 15 to 20 who are there, or thereabouts, in terms of making an application.
— The irony is that the Irish are still paying the price for their last banking crash,
less than a decade ago.
That one nearly broke the country.
Besides, Dublin’s not the only city after Brexit refugees.
You can see why:
In London, finance provides over 700,000 jobs,
and $31-billion in taxes.
The next biggest is Frankfurt—
it’s barely a tenth of the size, with 75,000 workers.
And what about Dublin?
Just over 35,000 jobs, and $2-billion in taxes.
— The long 250-year, perhaps, dominance of the City of London as the center for global financial trade
is probably peaking, and has probably passed.
And that is going to be spread out amongst smaller chunks of it
going to a greater number of countries, like France, Germany, et cetera.
— They don’t come much more London than this 300-year-old business.
It’s even called Lloyd’s...
...of London.
But the insurer has just set up in Brussels:
— Insurance is a highly-regulated industry,
and we require licensing to be able to issue insurance policies,
and that would have been a big impact on Lloyd’s.
— How big an impact would it have had on you?
— Well, it’s about 5% of our revenues.
So that’s about $2-billion.
— $2-billion a year.
That’s the first time Lloyd’s have put a figure on how much Brexit could have cost them,
and it’s almost as large as its entire annual profit.
London isn’t just a city. It’s a business model,
one based on hosting the world’s money and taking its spare change.
But after Brexit, London will struggle to remain quite such an open city,
in a nation that’s a bit more closed-off.
The big question is,
what does London—and Britain—do instead?
— What’s the historical analogy that we should use?
— Well, if we look across 1,000 years or more of financial services,
you see cities that were dominant.
You see Florence.
You see Paris.
You see Amsterdam.
And these were, at their times, and for maybe 100 years or more, the cities.
And London has lasted longer than most of those, but, maybe,
in the long sweep of history, in 200 years’ time,
we’ll be saying, “Well, and then the City of London,”
“and it went, and it came, and it’s gone.”