Is London Losing Its Global Standing After Brexit and Covid-19?

Brexit uncertainty and coronavirus upheaval have chipped away at London's global standing. Has the City lost its mojo?

The city is still a vital financial center for Europe. But its ability to attract companies raising capital is diminished.

Back in the mid-2000s, when finance was booming and the City of London was at the peak of its powers, brokerage boss Michael Spencer joked that statues of two U.S. politicians — Paul Sarbanes and Michael Oxley — should be put up near the London Stock Exchange. Their tough regulation of Wall Street had sent the cost of being publicly listed in the U.S. rocketing, making the British capital, already a magnet for global money and gateway to the nascent euro area, an ideal alternative IPO destination.

Now one can imagine executives in Paris and Frankfurt mulling similar statues of Brexit architects Nigel Farage and Boris Johnson, whose mission to remove the U.K. from the European Union and the single market has chipped away at London’s global supremacy. As JPMorgan Chase & Co.’s boss in France put it earlier this year, the likelihood of moving even one banking job to Paris was pretty much “nil” in June 2016. French officials estimate 4,000 Brexit-related jobs have since been announced.

While there’s no simple European winner here — as UBS Group AG Chairman Axel Weber recently grumbled, the EU has many hubs but none fully able to replicate the City — it’s striking to see how recent events have hurt the U.K.’s standing as a global pool of capital able to beat the U.S. at its own game. Ask a European banker where a company should list its shares today and London isn’t always the no-brainer. That’s reflected in its receding share of global initial public offerings and SPAC listings to 3% this year, from 17% 15 years ago. Something’s changed.

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