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Dublin gains 10,000 jobs as companies relocate

Britain’s decision to leave the European Union (EU) has cost London’s financial hub around 40,000 jobs, according to a new estimate from Michael Mainelli, the Lord Mayor of the City of London. This impact is significantly higher than earlier predictions, underscoring the far-reaching consequences of Brexit on the UK's economy and its standing as a global financial centre.

Mainelli, who has deep connections with hundreds of firms within the City, shared this updated figure in an interview with Reuters. The new estimate presents a much graver picture than earlier forecasts, such as the 7,000 job losses predicted by consultants at EY in 2022.

Dublin Emerges as a Major Beneficiary

Several European cities have reaped the benefits of job migrations post-Brexit. According to Mainelli, Dublin was the biggest winner, gaining 10,000 jobs as companies relocated positions out of London. Other major beneficiaries include Milan, Paris, and Amsterdam, which also saw significant inflows of financial professionals as firms sought to maintain operations within the EU’s borders following Britain’s exit.

Mainelli noted that the City of London, which encompasses a dense financial district featuring international banks, insurers, and financial firms, had employed 525,000 workers in 2016, the year of the Brexit vote. By his estimation, the city has lost just under 40,000 jobs due to the impact of Brexit. However, despite these losses, the financial district is bouncing back with new jobs, especially in areas like insurance and data analysis.

The City's Post-Brexit Recovery

Though the job losses are significant, the City of London has shown resilience. Worker numbers in the financial centre have grown to 615,000, a figure even higher than in 2016, with growth driven by sectors such as insurance and data analytics. This suggests that while Brexit has created substantial disruption, London’s financial district has diversified and adapted to new market needs.

Despite this growth, Mainelli emphasized that the fallout from Brexit was unavoidable and costly. "The City voted 70-30 to remain," he said, pointing to the strong opposition to Brexit from within London’s financial community. Firms and individuals within the City had predicted that the decision to leave the EU would bring significant challenges to conducting business with European partners.

Strengthening Relations with Europe

In response to these challenges, Mainelli has doubled down on efforts to engage with Europe. He has made nine visits to various European countries this year in an effort to rebuild bridges between London and the continent. Re-establishing strong economic and political ties has become crucial, particularly as Britain continues to deal with an economic slowdown exacerbated by the complexities of Brexit.

Mainelli’s calls for improving relations with the EU reflect a broader national sentiment. Keir Starmer, Britain’s new Prime Minister, has also focused on mending the fractured relationship with the EU. Starmer aims to remove trade barriers between the UK and EU, including seeking mutual recognition of professional qualifications, a move that would ease business operations across borders. However, he has ruled out a return to the EU’s single market, keeping the UK's departure intact while seeking more flexible trading arrangements.

Brexit’s Economic Challenges

The economic fallout from Brexit has been widely felt across various sectors of the UK economy. Many proponents of Brexit argued that leaving the EU would offer Britain the freedom to pursue reduced immigration, eliminate excessive EU regulations, and bolster economic growth. However, in practice, immigration levels have remained high, disentangling the UK from EU regulations has proven more difficult than expected, and economic growth has slowed.

Mainelli expressed concern over the UK's visa system, suggesting that reforms could help the City of London remain competitive. “There’s a lot more we could do on visas,” he said, acknowledging that the ease of bringing skilled workers into the UK could help offset some of the negative impacts of Brexit. He also revealed that the City is working on bilateral trade deals with countries like Germany, which could help revitalize trade links and foster new economic opportunities.

Impact on Global Financial Standing

As Brexit continues to reshape the financial landscape in Europe, London’s preeminence as a global financial hub has come under scrutiny. While London remains a critical centre for international finance, the job losses and market shifts underscore the competitive challenges the city faces post-Brexit. European financial hubs such as Frankfurt, Paris, and Dublin are positioning themselves to capture a larger share of the market traditionally dominated by London.

In conclusion, while the City of London is finding ways to recover from the fallout of Brexit, the financial centre has undoubtedly been hit hard. With 40,000 jobs lost to European rivals and firms relocating operations abroad, Brexit’s financial toll on London is much deeper than initially anticipated. As Britain seeks to rebuild its economic ties with Europe, the road to full recovery will be long and challenging, but the City's adaptability and resilience continue to offer hope for its future.