Question A:
All else equal, there are substantial advantages to having much of Europe’s human capital and infrastructure for international financial activity clustered in a single city, as they are at present in London.
Responses
© 2025. Kent A. Clark Center for Global Markets.
12%
4%
2%
14%
12%
46%
10%
Responses weighted by each expert's confidence
© 2025. Kent A. Clark Center for Global Markets.
3%
13%
13%
56%
15%
Question B:
All else equal, Britain’s rules on hiring, firing and working hours are significantly more conducive to financial activity than those in other large European countries.
Responses
© 2025. Kent A. Clark Center for Global Markets.
12%
6%
2%
12%
14%
44%
10%
Responses weighted by each expert's confidence
© 2025. Kent A. Clark Center for Global Markets.
3%
14%
17%
54%
12%
Question A Participant Responses
Participant |
University |
Vote |
Confidence |
Bio/Vote History |
|---|---|---|---|---|
 Philippe Aghion |
Harvard | Did Not Answer | Bio/Vote History | |
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 Franklin Allen |
Imperial College London | Bio/Vote History | ||
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There are huge agglomeration effects from having clusters of expertise.
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 Pol Antras |
Harvard | Bio/Vote History | ||
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Agglomeration economies in this industry appear to be pervasive (New York City, Singapore, Hong Kong, etc.)
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 Richard Baldwin |
The Graduate Institute Geneva | Did Not Answer | Bio/Vote History | |
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 Agnès Bénassy-Quéré |
Paris School of Economics | Bio/Vote History | ||
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There are economies of scale, but concentration also increases the risks related to size and possible collusion.
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 Timothy J. Besley |
LSE | Bio/Vote History | ||
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 Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
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 Nicholas Bloom |
Stanford | Bio/Vote History | ||
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There are large spillovers in finance - I worked in McKinsey in London and saw this first hand. Europe needs to compete with the US & Asia.
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 Richard William Blundell |
University College London | Bio/Vote History | ||
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Strong international nature of the city, the institutional structure and the levels of expertise work well together. Let's hope that remains
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 Elena Carletti |
Bocconi | Bio/Vote History | ||
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 Jean-Pierre Danthine |
Paris School of Economics | Bio/Vote History | ||
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 Paul De Grauwe |
LSE | Did Not Answer | Bio/Vote History | |
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 Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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 Ernst Fehr |
Universität Zurich | Did Not Answer | Bio/Vote History | |
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 Xavier Freixas |
Barcelona GSE | Bio/Vote History | ||
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Competition from virtual trading platforms limits the monopolistic effect while centralization increases liquidity
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 Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Bio/Vote History | ||
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 Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
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There may be a tradeoff involving competition, economies of scale and regulatory/political risk. Two or three financial centers may be best.
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 Luis Garicano |
LSE | Bio/Vote History | ||
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There exist some agglomeration economies. It is unclear however how substantial they are, with ICT playing a growing role in Finance
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 Francesco Giavazzi |
Bocconi | Bio/Vote History | ||
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Enrico Morretti's work on cities (The New Geography of Jobs) is a good starting point
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 Rachel Griffith |
University of Manchester | Bio/Vote History | ||
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 Veronica Guerrieri |
Chicago Booth | Bio/Vote History | ||
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 Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
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 Martin Hellwig |
Max Planck Institute for Research on Collective Goods | Bio/Vote History | ||
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Advantages from economies of scale and scope may well be matched by disadvantages from herding and systemic risk.
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 Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
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Some economies of agglomeration are evident - but seem to be eubsector-specific.
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 Henrik Kleven |
Princeton | Did Not Answer | Bio/Vote History | |
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 Botond Kőszegi |
Central European University | Bio/Vote History | ||
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 Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
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For hub-and-spoke structure, we need to balance agglomeration synergy against systemic risk externality (created at hub, borne by spokes).
-see background information here |
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 Per Krusell |
Stockholm University | Bio/Vote History | ||
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It's not clear to me what the positive agglomeration activities are. Agglomeration can be bad too. But I'm far from an expert on this!
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 Eliana La Ferrara |
Harvard Kennedy | Bio/Vote History | ||
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 Christian Leuz |
Chicago Booth | Bio/Vote History | ||
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Substantial agglomeration benefits in cities (Krugman, 1991); applies esp. to financial services and skilled labor
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 Costas Meghir |
Yale | Bio/Vote History | ||
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 Peter Neary |
Oxford | Bio/Vote History | ||
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Local costs (high house prices, inequality) but clear EU-wide gains to agglomeration. Unsustainable outside the Single Market however.
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 Kevin O'Rourke |
Oxford | Bio/Vote History | ||
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 Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
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There are efficiency advantages, due to the externalities and fixed costs in finance. But there can be distributional disadvantages.
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 Lubos Pastor |
Chicago Booth | Bio/Vote History | ||
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A single city offers economies of scale, deep pool of talent, strong external services. But 2-3 cities could also work.
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 Torsten Persson |
Stockholm University | Did Not Answer | Bio/Vote History | |
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 Christopher Pissarides |
London School of Economics and Political Science | Bio/Vote History | ||
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the vast majority of transactions nowadays are done electronically and I don't see big advantages to having them done from a single centre.
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||||
 Richard Portes |
London Business School | Bio/Vote History | ||
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Agglomeration benefits and externalities are why London is currently top of global financial centers. Brexit is a serious threat to this.
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 Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
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 Lucrezia Reichlin |
London Business School | Bio/Vote History | ||
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 Rafael Repullo |
CEMFI | Bio/Vote History | ||
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 Hélène Rey |
London Business School | Bio/Vote History | ||
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There are probably synergies between financial activities but no evidence that they should ALL be clustered together for efficiency,
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 Antoinette Schoar |
MIT | Bio/Vote History | ||
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Krugman (1991) suggests agglomeration in financial services is stronger than other industry due to knowledge spill overs, talent acquisition
-see background information here -see background information here |
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 John Van Reenen |
LSE | Bio/Vote History | ||
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 John Vickers |
Oxford | Bio/Vote History | ||
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Large economies of agglomeration. But caveat that the hub is sensibly regulated and not prone to collusion.
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 Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
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Wholesale financial services naturally congregate in a handful of locations....that's why there are financial centers in the first place.
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 Beatrice Weder di Mauro |
The Graduate Institute, Geneva | Bio/Vote History | ||
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 Karl Whelan |
University College Dublin | Bio/Vote History | ||
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There may be some wider advantages for Europe due to the clustering of financial service activity in London but it is likely to be small.
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 Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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We need to balance the benefits from local networks with the consequences of Brexit.
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 Fabrizio Zilibotti |
Yale University | Bio/Vote History | ||
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Question B Participant Responses
Participant |
University |
Vote |
Confidence |
Bio/Vote History |
|---|---|---|---|---|
|
Philippe Aghion |
Harvard | Did Not Answer | Bio/Vote History | |
|
|
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Franklin Allen |
Imperial College London | Bio/Vote History | ||
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Most other large European countries have higher social payments, taxes and more secure employment. Providing incentives is more difficult.
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Pol Antras |
Harvard | Bio/Vote History | ||
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I'm no expert on labor market regulations. But I'd imagine that other factors were more important in making London Europe's financial center
|
||||
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Richard Baldwin |
The Graduate Institute Geneva | Did Not Answer | Bio/Vote History | |
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Agnès Bénassy-Quéré |
Paris School of Economics | Bio/Vote History | ||
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Differences in labour flexibility are less marked for executives. Other factors are also important for the location of financial activity.
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||||
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Timothy J. Besley |
LSE | Bio/Vote History | ||
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||||
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Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
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||||
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Nicholas Bloom |
Stanford | Bio/Vote History | ||
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They are right now, but nobody knows what will happen post Brexit. We have been surveying firms and they know as little as the government.
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||||
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Richard William Blundell |
University College London | Bio/Vote History | ||
|
London currently provides a good international environment for the kind of mobility essential for a flourishing financial industry.
|
||||
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Elena Carletti |
Bocconi | Bio/Vote History | ||
|
|
||||
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Jean-Pierre Danthine |
Paris School of Economics | Bio/Vote History | ||
|
|
||||
|
Paul De Grauwe |
LSE | Did Not Answer | Bio/Vote History | |
|
|
||||
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Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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|
||||
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Ernst Fehr |
Universität Zurich | Did Not Answer | Bio/Vote History | |
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||||
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Xavier Freixas |
Barcelona GSE | Bio/Vote History | ||
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||||
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Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Bio/Vote History | ||
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||||
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Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
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Luis Garicano |
LSE | Bio/Vote History | ||
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The legal environment, safe, fast and low cost in the UK, is key. This goes beyond labor costs into Secutities and IPO cost etc.
|
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Francesco Giavazzi |
Bocconi | Bio/Vote History | ||
|
no brainer
|
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Rachel Griffith |
University of Manchester | Bio/Vote History | ||
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||||
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Veronica Guerrieri |
Chicago Booth | Bio/Vote History | ||
|
|
||||
|
Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
|
Rules in some other European countries - e.g. Ireland - are not worse
|
||||
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Martin Hellwig |
Max Planck Institute for Research on Collective Goods | Bio/Vote History | ||
|
If "financial activity" refers to trading, the statement is probably true, if to funding of the real economy, the matter is not so clear.
|
||||
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Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
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...But from social welfare perspective, macho investment bank culture (facilitated by such labour market practices) can be questioned
|
||||
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Henrik Kleven |
Princeton | Did Not Answer | Bio/Vote History | |
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||||
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Botond Kőszegi |
Central European University | Bio/Vote History | ||
|
|
||||
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Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
|
For non-tariff employees, income tax law and conducive (friendly) regulatory policies are way more important than hiring and firing rules.
|
||||
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Per Krusell |
Stockholm University | Bio/Vote History | ||
|
Not obvious that labor regulation is that relevant in this particular sector. It is in others but finance is full of other incentives.
|
||||
|
Eliana La Ferrara |
Harvard Kennedy | Bio/Vote History | ||
|
|
||||
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Christian Leuz |
Chicago Booth | Bio/Vote History | ||
|
Not clear that significantly so; depending on dimension of labor law, NL, IE, DE, CH can be close. And, less flex can be good for innovation
-see background information here |
||||
|
Costas Meghir |
Yale | Bio/Vote History | ||
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||||
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Peter Neary |
Oxford | Bio/Vote History | ||
|
Balance in UK labour markets is more tilted towards employers: ironically this also makes incumbent firms less likely to stay post-Brexit
|
||||
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Kevin O'Rourke |
Oxford | Bio/Vote History | ||
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||||
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Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
|
Labor contract flexibility is very important in finance, both for incentive reasons and to reallocate labor swiftly as opportunities change.
|
||||
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Lubos Pastor |
Chicago Booth | Bio/Vote History | ||
|
Flexible labor markets are particularly valuable to cyclical industries such as finance.
|
||||
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Torsten Persson |
Stockholm University | Did Not Answer | Bio/Vote History | |
|
|
||||
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Christopher Pissarides |
London School of Economics and Political Science | Bio/Vote History | ||
|
Financial institutions need flexibility above all and Britian offers it. But so does, e.g., Ireland.
|
||||
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Richard Portes |
London Business School | Bio/Vote History | ||
|
Overall, I doubt labour market regulation makes much difference in financial sector. No evidence. English language and time zone important.
|
||||
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Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
|
|
||||
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Lucrezia Reichlin |
London Business School | Bio/Vote History | ||
|
|
||||
|
Rafael Repullo |
CEMFI | Bio/Vote History | ||
|
|
||||
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Hélène Rey |
London Business School | Bio/Vote History | ||
|
Labour laws are being changed in a number of countries so it is hard to know.
|
||||
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Antoinette Schoar |
MIT | Bio/Vote History | ||
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||||
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John Van Reenen |
LSE | Bio/Vote History | ||
|
|
||||
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John Vickers |
Oxford | Bio/Vote History | ||
|
Ratio of value of flexibility to that of working terms regulation is relatively high in finance. UK is somewhat freer than most of EU.
|
||||
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Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
|
I think this is really secondary; "light touch" regulation and the lock-in from pre-existing activity are much more important.
|
||||
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Beatrice Weder di Mauro |
The Graduate Institute, Geneva | Bio/Vote History | ||
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Karl Whelan |
University College Dublin | Bio/Vote History | ||
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I don't believe labour laws in France, Germany or Ireland, for example, will be a deterring factor for financial service firms.
|
||||
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Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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One should add the prejudices against finance and wealth that permeate the continent.
|
||||
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Fabrizio Zilibotti |
Yale University | Bio/Vote History | ||
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