The UK has lost out on more than £110bn of services exports as a result of the 2016 Brexit referendum, according to a new study from Birmingham’s Aston University.
Academics said services exports were £113bn lower between 2016 and 2019 than they would have been if the UK had not voted to leave the EU.
The figure was calculated by comparing how the UK’s services industries, like finance and IT for example, would have grown if they had stayed on their pre-referendum trajectory to how they actually fared.
Jun Du, professor of economics at Aston Business School, said the results showed the overarching effects of Brexit on the services industries.
“What we find raises serious concerns about the damage to the UK’s services trade position and the likely spillovers to the economy and jobs related to the services sectors,” she said.
The post-Brexit trade deal did not include provisions for services, which make up around 80 per cent of the UK’s economy.
This meant the City of London lost its wide ranging access to EU markets and to passporting rights.
British firms that have not set up new bases in Europe now need to navigate a patchwork of individual nations’ financial services regulations.
The vast majority of British banking institutions expected Brussels to not grant equivalence, which would have restored access to EU markets after Brexit, and have moved thousands of jobs and more than £1 trillion of assets from London to European capitals.
January also saw Amsterdam overtake London as Europe’s share trading capital as €8bn of trading a day switched to the Netherlands capital during a matter of weeks.
London has since begun to close the gap thanks to the re-emergence of Swiss share trading in the City.
Du told the Financial Times that the fading effects of the Covid pandemic could accelerate the movement of activity away from the City of London and to Europe.
The Covid period created difficulties in moving business and individuals [which] slowed down this relocation process . . . it will now pick up, and get worse as businesses see that there is not much going on in UK-EU negotiations. I think this is only the beginning,” she said.
Chancellor Rishi Sunak has set about future proofing the City of London’s dominance as Europe’s financial capital, with a raft of regulatory changes expected.
A government review by Lord Jonathan Hill suggested changing London’s share listing regime to make the city more attractive to fintech companies and to allow Special-purpose acquisition company (Spacs) to go public in the capital.