Luxembourg finance watchdog faces last-minute Brexit rush

Life in London’s financial district will appear little changed when Britain leaves the European Union on March 29, defying predictions of an exodus of high-flyers to rival centres like Paris, Frankfurt and Dublin.

But as chaos reigns in Westminster, the mood in the capital’s historic “Square Mile” and Canary Wharf’s gleaming towers is one of resignation and regret.

Without meaningful access to the EU’s single market, the financial services sector is braced for a long goodbye to its status as the world’s international trade and banking hub, more than a dozen senior industry players told Reuters.

“It could be a slow puncture,” said City of London leader Catherine McGuinness, flagging a steady drain of talent and activity from an industry that has wielded little influence in Brexit negotiations even though it generates about 10 percent of Britain’s economic output.

“We won’t know what we are going to look like for at least 10 years.”

Sources cited years of political strife — from Scotland’s 2014 independence referendum to the bitterly contested Brexit vote and its aftermath — that have hurt Britain’s image as a safe haven for banks, market-makers and investors.

Few are willing to bet that the financial industry, whose 2.3-million-strong workforce stretches across the country, will be bigger or more profitable in a decade’s time.

Parliament has yet to settle on whether Brexit will be hard, soft or even happen at all after Prime Minister Theresa May pulled a vote scheduled for Tuesday on her divorce deal with the EU that she acknowledged she would lose.

But the feeling in the City is that much of the damage has already been done and is largely irreversible.

The finance industry is also grappling with a new political reality in which it has no clear allies in government.

Bankers initially expected ministers to champion their cause above other industries. Instead, the finance sector has been sacrificed to protect manufacturing and secure an end to freedom of movement from the EU.

“It feels like we have been thrown under the bus,” a senior executive at one of Britain’s top banks said.