London won't be replicated as a financial centre on the continent anytime soon, says Bank of England deputy governor

 
Rebecca Smith
Cunliffe said it would be tricky to displace the capital as a financial hub
Cunliffe said it would be tricky to displace the capital as a financial hub (Source: Getty)

The Bank of England's deputy governor for financial stability has expressed confidence in the City of London's standing as a financial hub post-Brexit, saying he does not see its success being replicated on the continent.

Sir Jon Cunliffe, a member of the Bank's Monetary Policy Committee (MPC), told the Western Mail, that while some job moves may well take place, the capital's financial centre crown was unlikely to be displaced.

"It may be that some activities that are carried out in London have to move to the continent," he said. "And maybe some activities carried out in London no longer become efficient, and rather than moving to the continent, they just go back to New York or somewhere else, or maybe they don't happen at all."

Read more: Sterling falls against the dollar after dovish comments from an MPC member

But I don't see London as a financial centre being replicated on the continent anytime soon as it takes an awful lot of critical mass of expertise and knowledge.

Banks and other financial institutions have been setting out contingency plans for Britain leaving the European Union without a transition deal in place.

"We have a responsibility for financial stability and we have got to know what the banks are planning, but not just the banks that are thinking of moving activity to the European Union, but also the plans of the EU banks that operate in the UK that will need to be authorised to operate in the UK after we leave," Cunliffe said. "They have made those plans and they have to, because it is important that they don't have discontinuity of service and an abrupt disruption at that point."

He added that the "exact scale" of job moves away to the likes of Frankfurt was not clear yet.

Cunliffe also struck a dovish tone with questions lingering over the Bank's next interest rate hike, saying while rates may need to rise, it was a "more open question" on timing.

"I am not going to try and anticipate the meeting, but for me the economy has clearly slowed this year," he said, noting the squeeze on real incomes and imported inflation from the depreciation of sterling.

Cunliffe said rates will need to rise if domestic inflation pressures develop as the Bank forecast, but is less certain on when that should start.

"Over the forecast period of three years, rates will need to rise. The exact timing of when that starts? Well, that for me is a more open question," he said, adding that they would not need to rise as high or as quickly as before the financial crisis.

Read more: What will an interest rate hike mean for house prices?

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