The Lord Mayor of London, Michael Mainelli, who serves as an ambassador for the city’s financial district, has expressed that the Square Mile has suffered significant job losses as a result of Brexit. He characterized the UK’s decision to exit the European Union as a “disaster,” leading to the loss of tens of thousands of positions within the financial sector.
Mainelli, the 695th Lord Mayor and a professor, represents the Square Mile, one of the globe’s foremost financial hubs, home to institutions such as the Bank of England, Lloyd’s of London, various international banks, law firms, and insurance companies. He stated that Brexit has cost the City approximately 40,000 jobs.
In a discussion with Reuters, Mainelli highlighted the dramatic effects of the UK’s separation from one of the most influential trading blocs worldwide. He mentioned that in 2016, there were 525,000 workers in the financial district, and his estimate indicates that around 40,000 jobs have been lost since then. Currently, there are about 615,000 jobs in the City, largely thanks to growth in the insurance and data sectors.
Mainelli pointed out that the Square Mile had generally favored the EU during the Brexit referendum, noting, “The City voted 70-30 to remain. We did not want it.” His remarks are likely to reignite discussions regarding the actual impact of Brexit on the UK’s lucrative financial services industry.
Concerns Regarding Brexit Benefits
Analysis from the UK’s Office for Budget Responsibility (OBR), an independent organization tasked with providing forecasts on the nation’s economy and public finances, revealed in May 2024 that Brexit is expected to decrease the UK’s long-term productivity by 4% when compared to remaining in the EU.
The OBR’s findings indicate that both imports and exports will be approximately 15% lower in the long term. Additionally, it suggests that the much-publicized new trade agreements with countries outside the EU will have minimal effects, with any slight improvements likely to occur gradually.
The OBR report notes, “This is because the deals concluded to date either replicate (or ‘roll over’) agreements that the UK already benefited from as an EU member state or do not have a material impact on our forecast.”
Challenges to Post-Brexit Trade Deals
The OBR pointed to the UK-Japan “Comprehensive Economic Partnership Agreement” as an example that largely resembles the agreement Japan entered into with the EU in 2019. The UK government’s economic assessment suggested that this deal would boost the UK’s GDP by 0.1% over the next 15 years. However, the OBR clarified that this estimate was based on a scenario where the UK would not have any trade agreement with Japan, despite being part of the EU-Japan agreement prior to leaving the EU.
Furthermore, a free trade agreement struck by the UK government with Australia—the first such agreement made with a country that does not have a similar arrangement with the EU—is currently facing legal challenges from UK environmental and food advocacy groups. The government estimates that this deal will increase the UK’s GDP by 0.1% over 15 years, but it is under scrutiny due to concerns that it may allow Australian producers of beef, lamb, mutton, and dairy to undercut British farmers regarding animal welfare and environmental standards.
Looking ahead, the new Labour Government in the UK has committed to a re-evaluation of the country’s relationship with the EU, yet there have been no concrete details released regarding the specifics of any new post-Brexit arrangements.
