Frankfurt, Paris or Dublin could replace London as Europe’s financial hub if Britain leaves the European Union, according to Standard & Poor’s.
The U.K. financial-services industry provides about 1.4 million jobs and attracts the most related foreign direct investment among rich nations, S&P said in a report on Tuesday. An EU exit would cut direct foreign investment into the U.K., particularly in financial services, and increase the costs of doing business, S&P said.
“This trend would potentially accelerate if the U.K. was outside an EU free-trade area or if free movement of labor were curtailed,” analysts led by Frank Gill in Madrid wrote in the note. “Overseas banking groups could be expected to relocate some of their trading operations from London.”
Deutsche Bank AG said in May it’s studying the impact of Britain’s exit on the firm’s business in the country and considering options including moving jobs to Germany. It comes as British Prime Minister David Cameron, whose Conservative Party won a surprise majority in the May 7 election, promised a referendum on EU membership by the end of 2017.
Britain exported almost half its goods and services to the EU -- 227 billion pounds ($359 billion) last year -- and foreign companies operating in the U.K. gain tariff-free access to a market of 500 million people in 28 countries.