The backlash from Britain leaving the EU could hurt European companies too, according to a Reuters investigation. David Doyle reports.
The backlash from Brexit could be set to hurt European companies. A Reuters investigation has looked into what would happen IF the UK leaves the EU, without protecting London's financial hub. Huw Edwards, one of those behind the report, says European firms stand to lose out (SOUNDBITE) (English) REUTERS REPORTER HUW JONES, SAYING: "The costs are going to come from basically splitting the European market into two. Which means you need to duplicate operations here in London and also on the continent. Some of those operations won't be duplicated because there's not enough overall business. But the big question is who pays for all this? Companies say the banks will have to bear the brunt of moving operations to the continent, while the banks are saying well not really. The ones we have spoken say they are being a bit optimistic if they think the to think the banks are being a bit optimistic if they think the banks will pay the bill." Many European capitals have been licking their lips at the possibility of Brexit. If London is locked out- they could scoop up the international business. Paris and Frankfurt have started actively marketing themselves as THE future destinations for European finance. But the shift would be dramatic. 37 percent of Europe's financial assets are managed in the British capital Banks warn that some of their current services may cease (SOUNDBITE) (English) REUTERS REPORTER HUW JONES, SAYING: "The big question is for the bond market for countries, you know sovereign debt, it's the money that keeps the national economies going. Without it you can't pay the bills. The ECB is getting worried now according to some banks that the big banks won't move their bond trading to the continent, because the market there is less developed, it's less deep." But Brexit isn't a zero sum game. The caveat to all of this is that the EU is as much a political project as it is economic. In Brussels and other EU capitals, its survival might be considered priceless.