Volume 67, Issue 2-3 - Special Issue: Economic Geographies of Brexit Guest Editors: Johannes Glückler, Dariusz Wójcik

This editorial offers a comprehensive introduction to the economic geographies of Brexit. It reviews the state of research on the multiple causes and consequences of the 2016 UK referendum and highlights the role of geographical context in the way that these factors interact in affecting voting behaviour and economic impact. Departing from an appraisal of the literature, we discuss the scope of six original studies collected in the special issue that, each using different analytical methods, present evidence on the impact of Brexit on the relocation of financial services firms, the recoupling of London with the other European financial centres, differences in regional productivity across the UK, as well as on the potential of UK regional policy to offset the disadvantages of financial decoupling from the European Union. Recognizing signs of political and economic disintegration beyond Europe, we conclude by highlighting a need for further research on the economic geographies of de- and recoupling.

This paper considers the question of how Brexit will affect the City of London from a long-term perspective, putting the changes induced by Brexit into the context of the City’s historical evolution over the past century. This perspective permits us to see that the City has continued to thrive because of a series of radical adjustments necessitated by the UK’s loss of its empire and by the emergence of global US financial power. Challenges to the global prominence of the City in Britain’s post-empire period have required two separate ‘reinventions’: the first, in the 1960s, involved localizing the Eurodollar markets; the second, in the 1990s, involved making London the preferred hub for providing sophisticated financial services within the European Union (EU)’s single market. The Great Financial Crisis put in motion several economic and political dynamics that have, however, undercut the City’s special global role. It is unclear whether maintaining the City’s offshore focus via a third reinvention, in a period of prolonged stagnation and increasing inequality in UK regions outside London, will be possible.

This paper examines the impacts of Brexit as an external shock to European financial centre relations. In particular, it studies the changing nature of Paris-London financial relations post Brexit. Early on in the Brexit process, Paris was not understood as the most likely European centre to benefit from Brexit given its tax regime and high office costs. However, our analysis shows that through policy and corporate network change, it has been one of the major beneficiaries. In making this argument, the paper develops a sympathetic critique of work on global cities that has tended to emphasise corporate networks without fully situating them within their political landscapes. We argue that bringing work in economic geography into closer dialogue with work in international political economy offers one fruitful way of addressing this oversight and, in turn, better understanding how inter-city relations respond to external shocks.

This paper responds to Bathelt and Li’s (2020) call for selecting more appropriate methods and improving their rigour by evaluating the feasibility of using factorial surveys to anticipate future relocation behaviour. By utilising a case study approach, focussing on Brexit and the UK FinTech industry, the paper examines to what extent business managers’ relocation intentions are driven by factors similar to those known to drive actual relocation behaviour and compares business managers’ relocation intentions with their companies’ actual relocation outcomes. We use a factorial survey conducted in 2018, which allows us to quantitatively analyse the impact of different Brexit scenarios and selected company characteristics on business managers’ likelihood to intend to relocate their UK business unit (or some functions thereof) to the EU and/or the US. Additionally, we collected qualitative secondary data on the actual relocation outcomes of the surveyed companies in February 2022 by investigating online platforms, such as LinkedIn, Companies House, and Crunchbase, as well as company webpages. The results of this mixed-methods approach highlight a significant variation in business managers’ intentions, and the importance of geographical and institutional proximity for relocation intentions and outcomes. We show that business managers’ relocation intentions are driven by factors similar to those known to drive actual relocation behaviour, such as their perception of the economic consequences of different Brexit scenarios, their territorial embeddedness, as well as their nationality. Most importantly, our findings indicate that, although factorial surveys are only moderately accurate when predicting the exact extent and destination of actual relocation, they are highly accurate when predicting whether a company relocates or not.

Because Brexit has implied a surge of relocation decisions by financial service firms during a short period of time, we examine the locational decisions of the financial industry in Europe. Adopting a relational perspective we analyze the association between similar relocation decisions of UK-based banks and the connectivity of their decision boards. Based on an analysis of relocation announcements in the media, press releases, and annual reports, as well as of interlocking directorships within the financial sector, our study connects research streams on relocation and internationalization with cross-board memberships and interlocks. Our findings suggest that the higher the competition between two banks and the stronger the connectivity in interlocking board memberships between them, the more likely are these banks to announce different relocation decisions. We interpret these robust findings as a behavior that effectively reduces competition for limited localized resources.

Although the UK’s exit from the European Union – ‘Brexit’ – has overwhelmingly dominated the national political discourse since 2016 to the expense of nearly every other domestic issue, the policy agenda in the wake of this process is beginning to emerge. This paper examines this agenda, ostensibly supporting a programme of ‘levelling up’ which responds to the perceived root-causes of Brexit. In doing so, we consider the funding streams proposed by the UK Government – namely the Towns Fund, Shared Prosperity Fund and Levelling Up Funds – and examine the extent to which the rhetoric aligns with the reality of their allocation. In doing so, we also consider how, if at all, these schemes correspond to the European Structural Investment Funds (ESIF) they are intended to replace. This paper examines this period of change to consider how the Brexit process is mirroring, and indeed entrenching, these processes of uneven development. We find that the early indications suggest that the UK government is proceeding with funding allocations in a way which can overlook places which meet the technical funding criteria, and therefore indicates political favouring is at play.