The way forward for London’s funds is at stake within the Brexit battle


The Brexit trade negotiations are hot this week. Even if the UK and the European Union come to an agreement, it will not cover the UK’s most valuable and EU-coveted industry: finance.

This has triggered a land grab between the 27-nation bloc and Great Britain for lucrative financial transactions and the jobs and clout associated with them. The financial services sector has the largest trade surplus of any industry in the UK, with 2019 exports of £ 79 billion, equivalent to US $ 106 billion.

European regulators have asked banks to shore up certain operations currently being carried out in London following Brexit in the EU. Banks such as Goldman Sachs Group Inc. and exchange operators such as the London Stock Exchange Group PLC have started trading on the continent in the past few weeks. Last week, the EU committed itself to rules on derivatives designed to prevent London-based traders at EU banks from continuing to operate seamlessly after Brexit was over on New Year’s Eve.

“This is part of a broader strategy to move funding to the EU,” said Tim Cant, a London-based attorney for the Ashurst Group who specializes in financial regulation. “It is part of this wider move of euro-denominated business into the euro zone.”

According to the auditing firm Ernst & Young, after the country’s Brexit vote in 2016, assets worth GBP 1.2 trillion were going to continental Europe from Great Britain. Hundreds of employees from JPMorgan Chase & Co., Goldman Sachs, Morgan Stanley and other banks are moving to Frankfurt, Paris and other European cities.