Britain’s exit from the European Union is likely to be a short-term “disaster” for UK financial services but the City should recover and remain a global financial hub, the Lord Mayor of London has told Yahoo Finance UK.
Peter Estlin, who was elected Lord Mayor of London last October, said in an interview last week: “In the short term window, it is a nightmare, it’s a disaster.
“But actually, if you look at it over a longer period, if we get focused on the longer term agenda it will be a carbuncle if we get back to focusing on what we do well, which is to innovate and focus on our international trading.”
The Lord Mayor of London heads the City of London corporation, which runs London’s central financial district. The Lord Mayor’s main role is to promote the city as a hub for business. Lord Mayor’s are elected by the City’s historic guilds and the post is a year-long term. The office is distinct from the Mayor of London.
In an interview in his Mansion House office — just a stone’s throw from the Bank of England and the Royal Exchange — the Lord Mayor drew comparisons between Brexit and the great fire of London, which destroyed the city in the seventeenth century.
“We had a horrendous fire in this country in 1666,” he said. “Devastated the City. Killed the city, and it was a European financial, trading capital. What came out of it? A global insurance market which we’ve led for 400 years.”
Estlin, who is taking a sabbatical from his role as a senior advisor to Barclays, said post-Brexit Britain had the potential to lead the world in areas like fintech, cyber security, and biotech.
“There’s no room for arrogance, for complacency,” he said. “We have to continue to earn our place. But the new markets that are appearing — fintech, cyber, the creative agenda, the technology coming out of that — are areas where the UK is continuing to shine.”
A recent report from EY said that at least $800bn (£622.9bn) of assets have been moved out of London as financial services prepare for a possible disruptive no deal Brexit. Estlin downplayed the significance of these moves.
“We have $8-9trn of assets under management. Fine, a few hundred billion has moved, we’ve potentially lost 5,000, 10,000 jobs. But what’s also happening is people are focusing on the negatives, they’re not focusing on the positives. Whilst we’ve lost a few thousand jobs, we’ve gained another 10,000 or 20,000 jobs in fintech, we’ve gained another 10,000 or 20,000 jobs in cyber, in biotech, and other areas.”
The Lord Mayor said big banks and financial services firms were “by in large prepared” but warned that small businesses were most at risk from the effects of Brexit.
“There’s only so much businesses can do,” he said. “They cannot plan for so many different outcomes. That’s the challenge.”
Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.