World Economy

London Risks Losing Status as Global Financial Hub

London-based banks would lose their right to operate in the 27-nation trading bloc.London-based banks would lose their right to operate in the 27-nation trading bloc.

London’s role as the world’s top financial center could be under threat as the implications of Britain leaving the European Union start to sink in, a survey showed on Monday.

The Z/Yen 20th global financial centers index, which looks at 87 financial centers, showed that London remains just ahead of New York, followed by Singapore and Hong Kong, Reuters reported.

The survey looked at competitiveness, business environment, infrastructure, and responses to questionnaires from people working in financial services.

Z/Yen said the Brexit referendum result was not reflected as it was based on data to the end of June 2016, just after the June 23 vote.

The next survey may be different, however.

“Looking ahead to GFCI 21, assessments given to London in July and August are significantly down from previous levels,” the company said in a statement.

“GFCI 21 may show some significant changes.”

Apart from London, Zurich is the only other European financial center in the Z/Yen top 10, in ninth place.

Elsewhere in the top 10, Tokyo is in fifth place, followed by San Francisco, Boston and Chicago, with Washington in 10th place.

Rival financial centers in Europe, such as Paris, Frankfurt, Luxembourg and Dublin, are hoping that some banking and other financial services based in Britain will move onto their turf.

Financial firms in the EU depend on a “passport” to offer their services across the bloc, but it is unclear whether Britain will continue to have full passporting rights for financial firms under new trading terms with the bloc that must now be negotiated.

Luxembourg, Frankfurt, Geneva and Munich are ranked 12, 19, 23 and 27 respectively, while Paris and Dublin came behind the Cayman Islands, at 29 and 31.

“Luxembourg and Dublin show strong rises in the ratings whilst Geneva and Amsterdam fall,” the survey said.

Meanwhile, the head of Germany’s central bank warned last week that London’s position as a financial hub will be dealt a severe blow if the UK left the single market.

Jens Weidmann, president of Deutsche Bundesbank, warned that the “hard Brexit” scenario, favored by conservative eurosceptics behind the “Leave Means Leave” campaign, would mean that Britain would be stripped of the right to authorize banks and finance companies to operate across the remaining 27 European Union nations.

He added that it would also allow Frankfurt to take business away from London.