E.U. agencies are packing up to leave London, and the city’s international power and prestige ebbs.
Last night, a coin toss in Brussels brought the post-Brexit future that bit closer. After months of jockeying and promotion, ministers from the E.U. 27 met to decide the future home of two key agencies currently housed in London, the European Banking Authority and the European Medicines Agency. With many European cities vying to host these influential agencies, the rounds of voting for each ended in a tie. So it was left to the Estonians, who currently hold the Council of the E.U.’s rotating presidency, to decide each contest by drawing one of two lots from a bowl. Thus did Amsterdam beat Milan to host the EMA, while Paris bested Dublin to become the EBA’s new home.
While neither agency is vast, the decisions made are key in suggesting the future power map of a Britain-free E.U., and in reflecting the reduced position London will hold outside the union. The decision also marks an end to months of phony war. After endless debate and some chaos following Britain’s narrow referendum vote in favor of leaving the E.U. last June, the real-world effects of Brexit are finally starting to be felt.
On the surface of it, these effects might seem slight. The European Banking Authority, which oversees the E.U.’s banking sector with measures such as stress tests, employs just 167 people—barely enough to occupy a whole floor of the East London skyscraper where it currently lodges. The European Medicines Agency, which evaluates and regulates European medical products, is a little more hefty at 900 employees. Taken together, the two agencies still constitute barely a drop in London’s huge employment ocean. But their departure from the British capital still matters.
For a start, they draw in money, both from their own budgets and through the many officials who visit London to conduct business with them. It’s estimated, for example, that those calling on the EMA fill around 350 hotel rooms every week. For a city as small as Amsterdam, with less than a tenth of London’s population, that alone is a major boost in income.
More significantly, the moves shift the map of European influence. Paris gaining the EBA is a major coup for its aspirations to become the E.U.’s de facto financial capital, a position currently held by Frankfurt, which failed to win its bid to host the agency. The EBA’s move to Paris could bring other relocations in its wake and replace much of the past year or so’s bluster about profiting from Brexit with something concrete. It also sets the scene for what may be a tug-of-war between Paris and Frankfurt for greater influence, one underlined by Goldman Sachs’ announcement yesterday that both cities would host its future European headquarters.
The fact that both Paris and Amsterdam won big yesterday may yet cause trouble down the road. Central and Eastern European E.U. members wanted at least one agency to go to their side of the union—Bratislava, the Slovakian capital, was once a front-runner to host the EMA. The siting of both organizations in North-Western Europe may spark resentment—the EMA coin toss was in fact brought about because Slovakia abstained from the final vote in protest at being sidelined. In a union that needs to show as much solidarity as possible right now, this is not a great look.
The biggest loser here, however, is quite clear. London is too large and powerful a city to see its influence eclipsed easily, but this was a palpable blow to the prestige and access of Britain’s banking and pharmaceutical industries. And it may well anticipate the shape of future losses to come. That many in Britain—and in London—are actually indifferent to the city’s waning power may help explain some of the frustrations and feelings of impotence that led to the Brexit vote in the first place.