We're getting the first signs that Brexit might kill the City of London
Now, that prediction could be coming true.
Somewhat ironically given the huge crash in the pound in the last few days, London is at the heart of the global foreign exchange markets with more than $1 trillion (£747 billion) of trades taking place in the city every day, but that volume could be about to substantially drop now that Britain has voted to leave the EU.
Speaking in Brussels on Tuesday night, French president Francois Hollande argued that now Britain has voted to leave the EU the City will no longer be able to clear euro-denominated trades, a key role of the Square Mile in the European currency markets.
"The City, which thanks to the EU was able to handle clearing operations for the eurozone, will not be able to do them," he said, according to a Financial Times report. "It can serve as an example for those who seek the end of Europe . . . It can serve as a lesson."
Hollande's view is one backed up by Germany's financial regulator, which has also said that London will no longer be the center of euro-denominated trading. The European Central Bank has wanted to stop British operations from clearing euros for many years, leading to a fierce court battle over the issue in 2015. However now that Britain is preparing to leave the EU, all bets are off.
It is not just in the forex markets where the City is at risk of losing its place at the top of the pile. Since the UK's Brexit vote, banking stocks have taken a huge hit, an indicator of a wider problem - if Britain is outside the EU, it is simply a far less attractive place for banks to do business. The economy will take a huge hit - recession is being predicted by some - and banks will generally see less business coming in.
"We expect lower economic growth and heightened uncertainty over the UK's future trade relationship with the EU to lead to reduced demand for credit, higher credit losses and more volatile wholesale funding conditions for UK financial institutions," Laurie Mayers, associate managing director at Moody's, said on Tuesday after the agency downgraded the outlook of the vast majority of the UK's big banks to 'negative.'
"Moody's believes that there will be little short-term liquidity implications for UK banks given the extensive contingency planning preparations by the Bank of England, regulator and the banks themselves," she added.
In the report Moody's also lowered its outlook on 12 British banks and building societies, including Barclays, HSBC, Santander UK, Nationwide, TSB, and Lloyds.
The financial jobs exodus
Uncertainty over the City of London's role as Europe's key financial hub, once the UK leaves the European Union, means that many banks are thought to be considering moving substantial numbers of staff away from their UK operations and to elsewhere on the continent.
On Friday it was rumoured that Morgan Stanley is preparing to move thousands of staff out of Britain, a rumour that was denied. It is also thought that HSBC and JP Morgan are among the banks that could send UK-based staff elsewhere in the aftermath of Brexit. Business Insider's Matt Turner has a handy chart to show just what banks may do in terms of UK staff.
"US global banks are likely to start strategically implementing parts of their contingency plans rather than wait for trade and service arrangements to be agreed," ratings agency Fitch said in a note on Tuesday.
Add to this the fact, that M&G Investments, the fund arm of insurer Prudential, is looking at expanding its operations in Dublin, according to Reuters.
Vodafone has also said it could move thousands of jobs out of the UK. While it is a telecoms firm and not a bank, this threat is a clear indicator of the diminishing attractiveness of the UK as a place to do business.
The proposed merger between the London Stock Exchange and Deutsche Borse, which would have seen the combined group based in London, now also looks like it could fall through after Brexit.
All-in-all, things are not looking good for the City of London. It may not be a death knell quite yet, but the City's role in the global financial system is about to be changed forever.