The Changing Landscape of International Finance Centres

What is London’s role as an IFC?

London has been a financial centre for hundreds of years and its financial services business has been built up over that period for a variety of reasons, some intrinsic to London and the UK; others linked to decisions in other countries, such as the development of the Eurobond market as a result of tax changes in the US.

The European Union has provided a significant boost to London’s status as an IFC - implementation of single market measures meant that business could be done throughout the whole of the European Union from just one regulated and authorised business wherever that was located in the 28 EU countries.

What other features have positively impacted London’s status as an IFC?

• The rule of law is a particularly important feature of the UK, not only for financial services but for business generally. English law is used to govern contracts that have nothing to do with the UK; many legal disputes are settled in London
• The UK can also claim political stability, and relative tax and regulatory stability
• The UK has a high-quality education system
• London has an appealing lifestyle
• The English language is also an advantage

How will Brexit affect London’s position as an IFC?

Brexit will have an adverse effect on London’s position as an IFC. When the UK leaves the EU, some activities currently conducted in the other EU member states from London will have to be switched to an EU centre. This applies to mainstream banking and insurance. In recent years, large investment banks, insurance companies and other businesses have established or built up existing entities in EU member states.