London coaxes bankers back from political chaos in Europe
Political chaos across Europe is pushing bankers to stay in London rather than follow through on plans to move to the continent.
Following Brexit, many bankS began shifting certain roles across the channel, sometimes due to requests from European regulators, and sometimes to stay better connected to the continent.
A senior banking source told the Mail on Sunday that the mood has now changed, as the French elections plunged the country into political uncertainty since the summer.
As France and Germany have become a “mess”, London now “doesn’t look so bad”, the source said.
Morning Wire has heard similar sentiment from figures in the capital markets community, stating that the UK had maintained its status as an attractive place to list amid international turmoil.
“There is a sense that the UK is starting to establish itself as an independent financial centre, well-regulated, good time zone and it is not Asia, it’s not the EU and it’s not the US,” said Mark Austin, a lawyer at Latham & Watkins.
In 2016, the planned number of Brexit-related relocations to Europe totalled 12,500, but this has since been reduced to 7,000, according to EY.
A focus on political chaos in Europe began after French prime minister Michel Barnier was ousted last week in a historic no-confidence vote thanks to a dispute over the country’s budget.
The turmoil is expected to continue until French parliamentary elections next year, but even then, the country is struggling.
“France’s underlying economic challenges remain, with a significant deficit and no approved budget in place,” said Prashanth Manoharan, head of execution consulting in EMEA at Liquidnet.
Political pressure on the continent is then set to intensify next year, as Germany’s elections are likely to produce a split Bundestag, “complicating efforts to address German economic challenges,” said David Zahn, head of European fixed income at Franklin Templeton.
“Overall, 2025 looks set to be marked by political noise across Europe, compounded by policy shifts under the new US administration,” he added.
The news comes following a forecast last week that the UK economy would grow twice as fast as the continent’s next year thanks to an increase in public spending announced in October’s Budget.
Britain’s gross domestic product (GDP) will increase by 1.4 per cent next year, analysts at ING said in the bank’s annual economic outlook, while the Eurozone’s economy is set to grow by just 0.7 per cent.