Rob Rooney, the former top executive of Morgan Stanley in London, has highlighted the impact of Brexit on the City of London, noting that other European financial centers such as Frankfurt, Madrid, Milan, and Paris have improved at London’s cost. Rooney oversaw the relocation of hundreds of employees and significant assets to Frankfurt to mitigate the effects of the UK’s exit from the EU. This move was part of a broader trend, with over 440 UK financial firms transferring nearly £1 trillion to various EU locations.
As the upcoming budget approaches, the economic implications of Brexit are garnering attention. Labour’s Rachel Reeves has attributed Britain’s sluggish growth and anticipated public finance downgrades to the 2016 Brexit vote, citing productivity forecasts from the Office for Budget Responsibility (OBR) that suggest a substantial shortfall compared to previous expectations.
The context of productivity in the UK has been concerning, particularly since the 2008 financial crisis, with the country lagging compared to its peers. The OBR now expects a downward revision of productivity growth forecasts, which could impact government borrowing significantly.
Since the end of the EU transition period, UK exports have not kept pace with G7 averages, particularly in cars, chemicals, and food. While services have performed relatively better, the financial sector has experienced difficulties gaining access to EU clients.
Critically, UK financial services have lost market share to countries such as the Netherlands and Ireland since the Brexit referendum. Despite London’s historical strength within the finance sector, its relative performance has diminished, raising questions about the city’s future as a financial hub.
The UK government is exploring strategies to boost productivity and enhance competitiveness while navigating the complexities introduced by Brexit. However, Reeves’ approach may face challenges, particularly given the party’s historical context and views on banking. The ongoing discourse suggests a need for innovative solutions to reconcile the impacts of Brexit on the financial landscape.
Source: https://www.theguardian.com/business/2025/oct/31/city-brexit-uk-productivity-eu-rachel-reeves-budget