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FRANKFURT/ LONDON (Reuters) - London remains the globe’s most attractive financial centre, extending its lead over New York despite Britain’s looming departure from the European Union, a survey found on Monday.
Britain’s departure from the trading bloc has led to some politicians and economists predicting London will lose its pre-eminent status as a financial centre, but there are few signs of that happening yet.
London was placed first, followed by New York, Hong Kong and Singapore in the Z/Yen global financial centres index (GFCI), which ranks 92 financial centres on factors such as infrastructure and access to high quality staff. New York was 24 points behind the British capital, the biggest gap between the two since the survey started in 2007.
New York’s ranking fell 24 points from last year, the largest fall among the top contenders, a dip the survey’s authors said was “presumably due to fears over U.S. trade”.
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Other than the EU saying Euro clearing has to be moved to Europe and Banks announcing plans to move thousands of people overseas. Other than that no signs at all.
The UK's credit rating has been cut over concerns about the UK's public finances and fears Brexit could damage the country's economic growth.
Moody's, one of the major ratings agencies, downgraded the UK to an Aa2 rating from Aa1.
It said leaving the European Union was creating economic uncertainty at a time when the UK's debt reduction plans were already off course.
Downing Street said the firm's Brexit assessments were "outdated".
The other major agencies, Fitch and S&P, changed their ratings in 2016, with S&P cutting it two notches from AAA to AA, and Fitch lowering it from AA+ to AA.
Moody's said the government had "yielded to pressure and raised spending in several areas" including health and social care.
It says revenues were unlikely to compensate for the higher spending.
The agency said because the government had not secured a majority in the snap election it "further obscures the future direction of economic policy".
It also said Brexit would dominate legislative priorities, so there could be limited capacity to address "substantial" challenges.
It added "any free trade agreement will likely take years to negotiate, prolonging the current uncertainty for business".
The EU has unexpectedly rejected Theresa May’s demand for fast-tracked talks on a Brexit transition, prompting British negotiators to warn Brussels there are “no excuses” for blocking progress.
Opening the fourth round of talks in Brussels, Michel Barnier, the EU’s Brexit chief negotiator, said his mandate excluded discussing a transition until “sufficient progress” had been made on citizen rights, Ireland and a financial settlement.
The tough line rebuffs one of the key demands in Mrs May’s Florence speech, raising tensions and dealing a blow to hopes of reaching an October deal to open trade talks.
While the EU side sees the transition as a way to unlock a deal on divorce with Britain, Mr Barnier’s position — cleared with the European Parliament and the EU’s 27 member states — indicates the union is willing to take its time and push for more divorce concessions first.
At the same time, Leo Varadkar, the Irish prime minister, added to the pressure for London to offer more on separation issues if trade talks are to begin.
“I don’t think at this stage it would be possible to say that sufficient progress has been made but it may well be possible by the end of October, when we meet up in Brussels,” he said after meeting Mrs May in Downing Street.
EU leaders will refuse to open talks with the UK on post-Brexit trade relations at next week’s summit due to a lack of progress on a divorce settlement, dealing a blow to British efforts to break a deadlock in negotiations.
However, the remaining 27 member states will approve the start of discussions within the European Commission over a future relationship, according to a draft summit statement seen by the Financial Times.
The summit conclusions drafted by Donald Tusk, European Council president, will be a serious setback for London, which on Thursday appealed to the EU to offer its chief Brexit negotiator a more flexible mandate.
The one-page statement will be the main outcome from a critical gathering of EU leaders on Brexit, which will set the course for negotiations over coming months.
Mr Tusk has discussed the approach with all 27 leaders, but some diplomats in Brussels believe the text may still evolve after the summit discussion, particularly on the issue of transition.
The draft outlines the progress made in some areas of talks — particularly with regard to citizen rights — but makes clear that not enough has been done to determine that “sufficient progress” has been made on a divorce settlement.
It suggests EU leaders will “reassess the state of progress” at a summit in December, and if sufficient progress is made, adopt additional guidelines for EU negotiators on a transition and future trade relations with the UK.
Take trade. Liam Fox, the international-trade secretary, once said that a trade deal with the EU should be one of the easiest in human history. David Davis, the Brexit secretary, who had earlier favoured a bilateral free-trade area with Germany that would be illegal under EU law, similarly claimed that trade deals with countries like China, America and India would be done within 12 to 24 months of the referendum. Some Brexiteers still fantasise about reverting to an echo of the 1930s world of imperial preference, through free trade with countries like Australia, Canada, India and New Zealand—apparently ignoring the 45% of British exports that now go to the world’s largest free-trade block, the EU.
Fresh fantasies keep sprouting. Countering claims that a no-deal Brexit would mean rocketing food prices, Chris Grayling, the transport secretary, suggested that Britain would grow more food of its own. Though some farmers hope to do just this (see article), his nod to the land girls of the 1940s encapsulates another curious Brexiteer nostalgia, for a sturdy wartime patriotism which critics of Brexit are lambasted for not sharing. John Redwood, a Tory MP, has called on the Treasury to produce “more optimistic” forecasts, while the chancellor, Philip Hammond, has been accused of treason (despite calling EU negotiators the enemy). When the OECD, an international think-tank, this week ventured that Brexit would damage the economy, Brexiteers noted sourly that, like the CBI business lobby, the OECD takes EU money.
Delusions are not unique to one side. Some Remainers still believe the EU would allow Britain full membership without free movement of people, an idea that has almost no support on the continent.