Asia could benefit from an exodus of financial business from London in the wake of a vote by the British electorate to leave the European Union, a leading Chinese expert said at the ADB meetings today.
Gao Haihong, senior fellow and head of the department of international finance within the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, said London could lose its role as an international financial centre as a result of a British exit (Brexit). “An important effect will be on London [and its role as an international financial centre],” she said.
She said a plethora of Asian cities and nations were well equipped for a mass relocation, most notably Hong Kong and Singapore.
Top executives at leading European and global institutions agreed that the quantifiable negative impact of a Brexit vote on June 23 would rest on the UK, but that the resulting uncertainty was impossible to quantify.
One of those uncertainties — and a large focus of the Brexit debate within business circles — is whether London would remain a world financial centre in the aftermath of a vote to leave the European Union.
Andreas Dombret, board member of Germany’s Bundesbank, said that “the biggest effect would be in the UK itself”. But he added that too many unknown factors could have an outsized effect on global economies, including the length of the negotiations following a vote to leave the union, who led those discussions, and alternatives to trade negotiations.
“There are so many questions... that it’s absolutely impossible — impossible — to quantify such a hypothetical Brexit,” said Dombret.
Mitsuhiro Furusawa, deputy managing director at the International Monetary Fund, said that Asia as a region would suffer little from Brexit.
“Brexit would pose major challenges to the UK and Europe. But for Asia, if you look at the weight of the trade to the UK from Asian countries... it’s less than 1% of GDP, with the exception of Singapore, which is 2%.”
Yves Mersch, member of the executive board at the European Central Bank, said the measurable effects of a leave vote would be manageable for Europe.
“While the quantifiable amount could be digested in pure macroeconomic modelling terms, there will also be confidence factors and those are much more difficult to foresee and I think what we can all not foresee will create uncertainty and uncertainty will affect the overall business outlook and will have larger consequences than the direct [impact],” he said.