Key facts
- Britain's financial industry has shown resilience post-Brexit, with employment near all-time highs and record profits.
- About 40,000 jobs have relocated from London to European financial hubs due to lost passporting rights.
- The UK's share of international finance market share has declined since 2015.
- Rising interest rates and deregulation have supported the financial sector.
- Britain's long-term economic productivity is projected to be 4% lower after Brexit.
A decade after the Brexit referendum, Britain's financial industry has demonstrated a surprising degree of resilience, defying early predictions of severe damage. JPMorgan CEO Jamie Dimon, who had warned of significant job shifts from London prior to the 2016 vote, now plans to expand the bank's presence with a new tower capable of housing up to 12,000 employees, a move hailed by Finance Minister Rachel Reeves as a substantial vote of confidence.
Employment in the City of London financial district is near an all-time high, with over 676,000 workers, a more than 25% increase since 2019. Banks are also reporting record profits, partly fueled by rising interest rates implemented by the Bank of England and other central banks in response to post-COVID inflation. The Labour government, elected in 2024, has accelerated deregulation, arguing that post-2008 financial crisis rules stifled growth, and has offered concessions to banks on capital requirements and taxes. Reforms to the EU's Solvency II rules have also bolstered the insurance sector, with gross written premiums doubling to $187 billion over the past decade. London has also solidified its position as a fintech hub, with digital bank Revolut valued at $75 billion.
However, this picture of recovery is nuanced. While London remains a major global financial center, its dominance has been eroded. Approximately 40,000 jobs have been relocated to European financial hubs like Paris and Dublin due to the loss of passporting rights, which allowed firms to serve EU clients from the UK. Research indicates that Britain has lost market share in 10 out of 12 categories of international finance since 2015, with its share of foreign capital declining from 8.6% to 7%. The UK's long-term economic productivity is projected to be 4% lower than if it had remained in the EU, and the country is considered less attractive for investment, partly due to political instability and higher government borrowing costs that increase credit prices for businesses and households. Lending to small businesses as a share of GDP has also fallen. Despite these challenges, former City of London leaders argue against returning to EU regulatory alignment, noting that the EU itself has not significantly advanced its financial market unification, leaving the UK as a key gateway to European capital markets.