London still top financial market #despitebrexit

In not very surprising news, the authoritative survey on financial markets that is out today shows only a slight fall in London in its rating as a Financial Services hub. There is a bigger fall for New York which comes second, only distant Frankfurt gets a better rating.


Really, whatever puffery appears in the press, this is not that surprising. The City is made up mainly of FX Brokers, for whom Brexit means nothing except profits due to volatile markets; insurance, which is a global business not really affected by Brexit - the US hurricanes are a much bigger worry this year; legal and accounting services - for whom Brexit is a payday in terms of advisory work...and then maybe Banking/Mergers and Acquisitions/IPO's.


The bit everyone gets excited about is the least important bit, just because it is understandable and full of alpha-male noisy vessels it gets the most press. The latter piece is also most affected by technology change and so Brexit, as discussed previously, provides a great fig leaf to cover for inevitable salary cuts, redundancies and moving to cheaper jurisdictions.


Brexit I feel though is having an effect, business seems to be slowing as the heat in the political argument grows - and boy is this growing. The main news channels and media are loving the Remainer moaning and indeed, given the believe it themselves, are keen to keep promoting this line. This aspect is definitely making overseas investors nervous and FX market makers are following trend and marking down the pound.


On balance, this is no bad thing as the economy in the UK is badly over-heated as it contains some very large asset bubbles, with no monetary or fiscal tools in place to try and limit these - as such a slow down in activity and consumer spending will at least act as a brake on pumping more air into the bubble. Certainly, weakness in the pound is useful for slowly re-kindling exports and reducing external investment further in favour of increasing inbound investment, even though it makes holidays less fun than they were for many.