London must lose clearing crown after hard Brexit, warns BlackRock boss

William Turvill
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General Election - Economy
London currently dominates euro-denominated clearing (Source: Getty)

London will not be able to play a central role in the core functions of European financial markets like clearing in the event of a so-called hard Brexit, the vice chairman of the world’s largest asset manager has warned.

BlackRock's Philipp Hildebrand suggested at the European Financial Forum that the UK cannot “have the cake and eat it”.

“I don’t see how clearing can be outside of the European Union,” said Hildebrand, a former chair of the Swiss National Bank.

Read more: The battle over London's euro clearing crown is heating up

“Having gone through the Swiss experience, it was very clear from the very beginning that you could not have the cake and eat it. If you want to take full control of immigration, you cannot be in the Single Market.”

He added: “What follows is that you cannot be in the Single Market. And I think what follows from there is pretty clear: the core functions of the European financial markets will not be outside.”

The battle over euro-denominated clearing has heated up in recent months. London currently dominates euro-clearing, but European leaders including the French President have said this will have to change once the UK has left the European Union.

Read more: London unlikely to lose out on euro clearing post-Brexit

Accountancy firm EY has estimated that 83,000 jobs could be lost if it is forced away from London and that a “significant domino effect” could raise this figure to 232,000.

Meanwhile, London Stock Exchange Group chief executive Xavier Rolet warned last year that moving clearing could cost banks $77bn in additional collateral, citing research by think tank Clarus.

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