Duncan Mavin is a former Bloomberg Gadfly columnist.

Lionel Laurent is a Bloomberg Gadfly columnist covering finance and markets. He previously worked at Reuters and Forbes.

Boris Johnson's backing of Brexit has heightened anxiety in the City of London. But Europe's dominant financial center faces bigger threats to its future than whether or not the Brits listen to their capital's mayor and quit the EU.

A vote to leave in June's referendum certainly wouldn't help London's financiers. Take this from Deutsche Bank analysts led by Barbara Boettcher:

"An EU exit would mean uncertainty for the ability to use the U.K. as a hub to provide banking services into Europe. This has implications not just for the EU operations of U.K. financial institutions (which have actually reduced significantly post-crisis), but also for the U.K. and European operations of banks globally."

Some banks might move their headquarters to continental Europe or shift jobs, Deutsche Bank said, something senior executives have warned about in private over the past year. HSBC chief Stuart Gulliver broke cover on Monday and said his bank could shift about 1,000 U.K. jobs to Paris in the event of an exit.

But despite the veiled (and not so veiled) threats, the City of London is already under pressure on jobs and to defend its pre-eminence in Europe -- even before a decision on the EU.

For starters, many roles that were traditionally strong in London have been in the firing line since the financial crisis. In particular, big banks are shrinking fixed income and commodities trading desks in response to regulations that make these businesses more capital intensive and less profitable. At the top global investment banks, fixed income revenues and staffing levels fell about a third between 2010 and 2015, according to Coalition research.

Shrinking Revenues
Global fixed-income business has failed to bounce back
Source: Coalition Research tracking top global investment banks

More broadly, weak revenue growth across banking puts more emphasis on costs as the best way to lift profit. Investment-banking revenue has dipped 15 percent since 2010 but costs have remained stubbornly high despite layoffs. That suggests more cuts will come.

Meanwhile, the soaring cost of employing staff in London makes it harder to keep large swathes of workers there when other locations will do. London has by far the most expensive office space in Europe -- annual leasing costs run to $122 per square foot on average, compared to just $56.75 in Paris or $53.25 in Frankfurt, according to Knight Frank. Surging accommodation costs are pushing up the cost of living too. The median house price in London climbed about 13 percent in December from a year earlier to 431,053 pounds ($615,931), according to Bloomberg's Sharon Smyth.

Already, many global investment banks have shifted jobs to smaller U.K. cities such as Bournemouth, Birmingham and Manchester and to offshore sites, and more plans are afoot. Credit Suisse said in October that it will cut about 1,800 back-office jobs in London -- about a third of its U.K. workforce -- with many being relocated to lower cost centers including Poland.

Trader Cuts
Fixed-income has been hit hardest by banking layoffs
Source: Coalition Research tracking top global investment banks

So far, the leaking of jobs has been slow. The number of people employed in financial services in London has actually edged up slightly to 360,200 in mid-2015 from 358,000 at end-2011, according to data from TheCityUK, a lobby group. But that masks an underlying shift away from core banking roles. The number of people employed in banking has slipped to 143,600 from 146,100 over the same period.

With all global banks under pressure to cut costs, the geography of Europe's finance industry is going to change -- whether Boris succeeds or not.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the authors of this story:
Duncan Mavin in London at
Lionel Laurent in London at

To contact the editor responsible for this story:
James Boxell at