London was dealt a Brexit blow on Monday when new research showed the City had lost its title of Europe’s largest equity market to France.
Almost two years after Britain left the European Union’s single market and customs union, an index compiled by Bloomberg showed combined market capitalisation of primary listings in Paris overtook London in US dollar terms.
As economic growth concerns weigh on UK assets, China’s relaxation of its Covid zero policy also boosted shares in French luxury brands like LVMH SE and Gucci owner Kering SA.
By contrast domestically-focused UK shares have slumped this year, while the fall in the value of the pound against the US dollar has also worked in Paris’s favour.
The UK economy has been ‘permanently damaged by Brexit’, says former BOE policymaker Michael Saunders in an exclusive interview with @lizzzburden https://t.co/ndFxnDAt9Q pic.twitter.com/4HxC2QsLyg
— Bloomberg TV (@BloombergTV) November 14, 2022
Asked if quitting the EU had permanently damaged the City, former Bank of England Monetary Policy Committee member Michael Saunders told Bloomberg TV: “I would cast the net wider...the UK economy as a whole has been permanently damaged by Brexit.
“It’s reduced the economy’s potential output significantly, eroded business investment.
“If we hadn’t had Brexit, we probably would not be talking about an austerity Budget this week, the need for tax rises, spending cuts would not be there if Brexit had not reduced the economy’s potential output so much.”
Liberal Democrat Treasury Spokesperson Sarah Olney added: “This is a bitter blow that shows the damage done by the Conservatives to London’s position as a global financial centre.
"The Government’s botched Brexit deal is turning off investors and sending business elsewhere.
“Rishi Sunak must cut the ideology and start putting Britain’s financial interests first.”
The Government’s fiscal watchdog, the Office for Budget Responsibility, says Brexit represents a 4 per cent permanent hit to the economy.
Trade from the EU to the UK down has fallen sharply since Britain left the EU while the loss of hundreds of thousands of European workers has led to damaging labour shortages.
Combined with the aftermath of the Covid pandemic and the fallout from Russia’s invasion of Ukraine, the effects of Brexit have added to the drag on Britain’s economy which is heading for a lengthy recession.
Last week official data from the Office for National Statistics showed the UK economy shrank by 0.2 per cent in the third quarter with economists predicting an even larger slump in the final quarter of the year.
Thursday’s Autumn Statement may lead to further downward pressures on the economy with Chancellor Jeremy Hunt set to announce around £55billon of tax rises and spending cuts as he tries to plug a fiscal hole in the public finances.
