As Brexit negotiations continue, the business and trade agreement is on the top of the UK’s agenda. The topic of how the UK will survive after we exit the union is troubling many commentators, however, it is evident that without the UK’s financial sectors and connections, it may actually be the EU who has pause for thought, rather than the UK.
Despite Brexit, the UK is dominating the finance industry in Europe. A recent study by Think-tank New Financial found that the UK is the world’s second-largest financial centre, just behind the US, and ahead of China and Japan. Even if the UK loses a quarter of its international financial sector, it will still be double the size of any other European business centre. It is already nearly three times as large as France or Germany, two of the biggest markets in the EU.
The Brexit vote fuelled the discussion among different countries’ financial markets, focussing their attention on their relative strengths and weaknesses. The UK still remains the stronger option for international finance, due to strong business hubs up and down the country, along with strong ties to Asia and the Middle East. Brexit has caused no European city to gain any advantage over the UK in the financial markets. Without the UK, the EU will lose an important market for deals and trading, not to mention a strong geographical connection to the broader world.
To echo this, the UAE and UK trade rose by over 12% to £17.5bn in 2017. Last year, UK exports to UAE amounted to £11.1 billion while UK imports from the UAE were £6.4 billion, as the UK reported a trade surplus of £4.7 billion. Of all UK exports to the UAE in 2017, £3.5 billion (31.2%) were services.
William Wright, the managing director of New Financial told the Financial Times, “While the UK should not be complacent about its dominant position as a financial centre in Europe, Brexit is unlikely to change things anytime soon”.
With this dominating position in the European financial market, Britain has undoubtedly a point of strength in negotiations. However we collectively feel about Brexit, we should not fear leaving the EU but approach the negotiations with confidence.
Britain’s financial sectors will continue to lead the way in European markets and London’s status will evolve.
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