Amsterdam has now replaced London as Europe’s largest financial center, and the Bank of England has issued a warning that it could be further weakened.
Not Frankfurt or Paris, but Amsterdam has established itself as the most important European financial market: In January this year, the Dutch metropolis Amsterdam has replaced London as the largest stock market in Europe. On the Amsterdam Stock Exchange, daily trading volume in January was 9.2 billion euros, significantly more than London’s 8.6 billion euros, according to data from financial markets firm Cboe Europe.
Take a look at the 2020 figures to compare: According to Cboe, the average daily trading volume in London in 2020 is 17.5 billion euros, while Frankfurt ranks second with a daily average volume of 5.9 billion euros and Amsterdam ranks sixth in Europe with only 2.6 billion euros.
In the Brexit negotiations between the EU and the UK, the service sector, which accounts for 80% of the UK’s total value added, was excluded. But with the end of the transition phase of the UK’s withdrawal from the EU at the end of this year, UK financial service providers lose their automatic access to the EU internal market.
Amsterdam, on the other hand, benefits from the UK’s withdrawal, which forces EU investors to look for new trading partners within the EU. Platforms such as ticket platform Cboe and London trading platform Turquoise, started preparing for relocation after the UK voted to leave the EU in 2016. On such platforms, London trading was reduced by more than €6 billion per day on January 4, the first day after the end of the transition period. And business on Britain’s domestic stock exchanges is increasingly declining.
Thousands of job outflows
As trading volumes have fallen, a dispute between the UK and the EU over the future structure of financial market relations has loomed. Negotiations on mutual recognition of relevant financial market rules are also underway. The governor of the Bank of England said London is unlikely to accept Brussels’ corresponding demands. And he said it would be a mistake if the EU tried to shut out the British financial sector.
So far, the ongoing dispute over the financial services industry has not led to a large exodus of banks from the City of London, but many financial institutions and other companies have set up branches and relocated parts of their operations in cities such as Paris, Dublin, Amsterdam and Frankfurt, resulting in the loss of about 7,000 jobs in London.
At the same Time, many Brexit supporters hope to develop London into a “Singapore on the Thames” this expectation may be defeated: because of the strict regulation of financial market rules and tax rates.
However, there is still a glimmer of hope for London: this month, the UK resumed trading in Swiss stocks. The average increase in trading volume is 250 million euros per day and is expected to exceed 1 billion euros in the future, reaching the level reached before London suspended trading in Swiss stocks in June 2019. And: Brussels and London plan to reach an agreement on mutual recognition standards by March.
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