After the Fracture: How Britain’s Financial Industry Recovered from Brexit

People take part in the "National Rejoin March IV" to show support for the UK to re-join the European Union in London, Britain 20 June 2026. (EPA)
People take part in the "National Rejoin March IV" to show support for the UK to re-join the European Union in London, Britain 20 June 2026. (EPA)
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After the Fracture: How Britain’s Financial Industry Recovered from Brexit

People take part in the "National Rejoin March IV" to show support for the UK to re-join the European Union in London, Britain 20 June 2026. (EPA)
People take part in the "National Rejoin March IV" to show support for the UK to re-join the European Union in London, Britain 20 June 2026. (EPA)

In the buildup to 2016's Brexit referendum, JPMorgan CEO Jamie Dimon said the US bank could shift 4,000 jobs from Britain, joining a chorus of executives who warned a vote to leave the European Union would ravage the country's finance industry.

A decade later, the Wall Street giant plans to build a tower in London's Canary Wharf that it says could house up to 12,000 employees - a commitment hailed as "a multi-billion-pound vote of confidence" by finance minister Rachel Reeves.

Other signs too suggest the British financial industry has weathered Brexit better than many expected: employment in the City of London financial district is near an all-time high, and banks are posting record profits.

But interviews with executives and data reviewed by Reuters paint a more nuanced picture, of Britain as a financial center whose dominance has been eroded while the country itself has become less attractive for some investors.

"Brexit undeniably weakened the City's position," said Michael Mainelli, who led the financial district as Lord Mayor in 2023 and 2024, citing relocation of jobs from London to cities like Paris and Dublin.

"Yet Europe too is weaker. Both the EU and the UK have been losing out to the enormous growth in Asian financial markets."

To keep serving clients across the 27-country EU, British firms that lost so-called passporting arrangements moved about 40,000 jobs to European financial hubs, according to estimates from the City of London Corporation, the municipal body for the "Square Mile", which speaks for the sector more broadly.

Britain remains second only to the United States as a destination for ‌foreign capital, hosting ‌more than £12 trillion ($16 trillion) in foreign direct investment, portfolio investment and cross-border deposits at the end of 2025 according to IMF data ‌cited by ⁠Barclays.

Its share has ⁠declined, however, from 8.6% in 2015 to 7% in 2025. In the same period, the US share of foreign capital has increased to 25% from around 20%, thanks mainly to demand for US stocks.

Since 2015 Britain has lost market share in 10 out of 12 categories of international finance, including foreign exchange trading, stock offerings and assets under management, according to research company New Financial.

"The impact of Brexit on the City has been like the UK breaking its own arm - it has not been fatal but nor has it been great, and there was a degree of self-injury," New Financial's founder William Wright said.

RISING RATES, DEREGULATION HELPED UNDERPIN FINANCIAL SECTOR

This month, Dimon said JPMorgan will extend its $1.5 trillion Security and Resiliency Initiative to Britain, helping companies in critical industries raise money.

As well as a landmark new London HQ, the bank is expanding its campus in Bournemouth on England's south coast at a cost of £300 million to £350 million. Citigroup has likewise said it is investing £1.1 billion in its UK operations.

Across town from Canary Wharf, the British ⁠capital's centuries-old financial heart appears thriving: according to the Corporation, there are 676,000 workers in the City of London, up more than 25% since ‌2019.

"I did believe the City would have another life after Brexit, but I didn't know it would be so quick ‌and so strong," said Soren Jessen, whose 1 Lombard Street restaurant faces the Bank of England.

Sales are better than ever, he said.

Britain formally left the EU on January 31, 2020, just weeks before COVID-19 lockdowns ‌began. The pandemic and a string of tumultuous events since - including the Ukraine and Middle East wars and US President Donald Trump's upending of trade and security arrangements - make Brexit impacts ‌hard to isolate.

While rival hubs have chipped away at London's market share, global and national developments have helped underpin the financial services sector.

A post-COVID inflation spike prompted the BoE and other central banks to hike interest rates, turbocharging the returns to banks from lending.

After winning power in 2024, the Labour Party government accelerated deregulation, arguing that rules put in place after the 2007-2008 global financial crisis had stifled growth.

Charged by Reeves with supporting the government's growth agenda, banks also swerved fresh taxes and won concessions from regulators on capital requirements.

Britain's freedom to tweak the EU's Solvency II rules by cutting administrative costs and easing capital constraints such as the buffers ‌insurers must keep against losses has meanwhile boosted the insurance sector.

According to the London Market Group of insurers, gross written premiums have doubled in the last decade, to $187 billion. London has become a center for financial technology, too: digital bank Revolut is now Europe's most ⁠valuable fintech firm, valued at $75 billion in a November ⁠share sale.

BRITAIN MAY BE A LESS ATTRACTIVE PLACE TO INVEST

The broader economy has struggled to grow, however, lagging the United States, where consumer spending and a tech-sector boom have driven growth, and even the sluggish euro zone.

Britain's long-run economic productivity will be 4% lower after Brexit than if the country had stayed in the EU, with much of the damage done already, the government's budget forecasters have estimated.

"You can point to the day in June 2016 where the UK became, in reality, a less attractive place to invest," said Premier Miton CIO Neil Birrell, who has significant UK holdings but has been reducing them.

Britain's bond yields are now among the highest of major advanced economies, not helped by political instability that has seen six prime ministers in the decade since the Brexit vote.

Higher government borrowing costs in turn push up the price of credit for businesses and households. Lending to small businesses as a share of GDP has fallen from just above 8% in 2016 to 6.5% in the year to date, BoE data shows.

A recent Boston Consulting Group report identified "a self-reinforcing credit trap" where businesses don't seek credit because they expect to be rejected and lenders pull back because they see insufficient demand.

Reforms to boost investment by domestic pension funds in British growth stocks from just 0.1% of their assets could help Britain prosper in the next decade, New Financial's Wright said, as could more participation by retail investors.

Brexit has increased administrative burdens such as customs paperwork for businesses and disrupted supply chains. The current Lord Mayor has nevertheless argued against a return to regulatory alignment with the EU, which could give greater access to its single market over time.

Former City of London chief Mainelli said the EU itself had failed to take advantage of Brexit opportunities in finance, noting that plans to unify an untidy patchwork of national markets remain unrealized, holding back the bloc's growth.

"As the EU ... hasn't moved forward much in the past decade, the UK hasn't lost much," Mainelli said. "The City remains the capital markets gateway to Europe."



Saudi Arabia Offers 100% Social Insurance Debt Waiver to Businesses That Have Exited Market

Officials from the General Organization for Social Insurance at an earlier meeting with businessmen and businesswomen at the Riyadh Chamber (SPA)
Officials from the General Organization for Social Insurance at an earlier meeting with businessmen and businesswomen at the Riyadh Chamber (SPA)
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Saudi Arabia Offers 100% Social Insurance Debt Waiver to Businesses That Have Exited Market

Officials from the General Organization for Social Insurance at an earlier meeting with businessmen and businesswomen at the Riyadh Chamber (SPA)
Officials from the General Organization for Social Insurance at an earlier meeting with businessmen and businesswomen at the Riyadh Chamber (SPA)

Saudi Arabia's General Organization for Social Insurance (GOSI) has made businesses that have ceased operations and exited the Saudi market eligible for a 100% waiver of outstanding social insurance debts, subject to approved conditions, Asharq Al-Awsat has learned.

The move aims to address accumulated financial obligations, help businesses settle their accounts and close outstanding cases, and support stability in the Kingdom's private sector while resolving financial difficulties faced by companies that have left the market.

The measure is part of a broader package of improvements GOSI is implementing to enhance services for employers and businesses, in response to feedback and suggestions gathered during direct meetings with officials and business owners, in cooperation with chambers of commerce.

Taking Economic Conditions into Account

The initiative has economic and regulatory implications beyond debt relief, seeking to address financial and administrative liabilities left behind by businesses that have exited the market and facilitate the formal closure of their records in accordance with regulations.

Its main significance lies in striking a balance between protecting the rights of the social insurance system and its contributors, on the one hand, and taking into account the economic circumstances of businesses that have ceased operations, on the other.

It also reinforces regulatory flexibility in the business environment, ensuring that accumulated obligations do not become a permanent obstacle to the settlement of financial and administrative affairs.

Enhancing Market Attractiveness

The initiative reflects a more flexible approach to dealing with business distress, focusing on resolving outstanding liabilities rather than allowing them to remain a continuing burden on business owners.

This approach is expected to strengthen confidence in regulatory procedures and enhance the attractiveness of Saudi Arabia's business environment.

The move is particularly significant given the changing nature of the business sector, with new companies entering the market each year while others cease operations because of competition, rising costs, or shifting market conditions.

Settling the social insurance accounts of businesses that have exited the market could ease the administrative and financial burden on their owners, help them reorganize their financial affairs and potentially pave the way for a return to commercial activity in the future, without old liabilities remaining an obstacle, subject to applicable regulations.

According to information obtained by Asharq Al-Awsat, GOSI has notified all companies and establishments of improvements introduced to its business services, including the debt waiver.

The measure is designed to enable businesses that have ceased operations to resolve their outstanding social insurance obligations and complete the regulatory procedures associated with closing their operations, easing the financial burden on owners whose businesses are no longer active.

Service Improvements

In a related development, GOSI's improvements include upgrades to services for registering businesses, terminating their activities and managing ownership records, alongside efforts to resolve recurring technical problems and improve the quality of digital services.

The changes are intended to improve the user experience and accelerate transaction processing.

GOSI has also expanded electronic payment options through its GOSI Business app, allowing employers to pay amounts exceeding 30,000 Saudi riyals ($8,000) in multiple installments.

The measure aims to make it easier for businesses to meet their financial obligations while providing greater payment flexibility.

The updates also include measures to increase transparency in transaction processing by clarifying the reasons for rejecting occupational injury claims and contributor-related transactions.

Notifications have also been introduced through the GOSI Business and Tawakkalna apps to inform users when applications are received, accepted, returned, or rejected.

Together, the improvements reflect GOSI's efforts to modernize its digital services, simplify procedures for employers and improve the management of social insurance obligations.

The measures are also intended to support the business environment and help resolve outstanding financial and administrative matters involving businesses.


From Aramco's Profits to State Budget Revenue: How Do Oil Proceeds Reach Government Coffers?

A general view shows Ras Tanura's oil production plant near Dammam in Saudi Arabia's Eastern Province (AFP)
A general view shows Ras Tanura's oil production plant near Dammam in Saudi Arabia's Eastern Province (AFP)
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From Aramco's Profits to State Budget Revenue: How Do Oil Proceeds Reach Government Coffers?

A general view shows Ras Tanura's oil production plant near Dammam in Saudi Arabia's Eastern Province (AFP)
A general view shows Ras Tanura's oil production plant near Dammam in Saudi Arabia's Eastern Province (AFP)

Saudi Aramco's financial results and Saudi Arabia's third-quarter budget performance report, released on the same day, revealed a divergence between the company's rising profits and declining government oil revenue recorded in the state budget.

While Aramco's net income rose 34.2% during the first nine months of 2026 to SAR 380.6 billion ($101.5 billion), government oil revenue fell 1.3% over the same period and declined approximately 23% in the third quarter alone.

Comparing the two indicators does not necessarily imply a direct relationship between the company's profits and the revenue flowing into government coffers. Corporate earnings are recognized under different accounting principles from those governing the calculation and collection of government revenue.

The financial relationship between Aramco and the government also involves multiple channels, including taxes, royalties, dividends and offsetting settlements, each with its own payment and collection schedule.

Aramco's Profits and Cash Flows

Aramco reported net income of SAR 380.6 billion ($101.5 billion) for the first nine months of 2026, compared with SAR 283.6 billion ($75.6 billion) in the corresponding period last year, an increase of 34.2%.

Adjusted net income reached SAR 368.9 billion ($98.4 billion), up from SAR 302.3 billion ($80.6 billion) a year earlier.

However, the increase in earnings was not accompanied by a comparable rise in cash generated by the company's operations, according to its financial report.

Cash flow from operating activities totaled SAR 355.8 billion ($94.9 billion), compared with SAR 357.6 billion ($95.4 billion) in the same period last year, remaining largely unchanged.

Aramco attributed this to changes in working capital, which refers to funds tied up in day-to-day operations, including outstanding sales receivables, inventories and amounts owed to or by the company.

These movements limited the extent to which higher earnings translated into operating cash flow.

Meanwhile, free cash flow increased to SAR 221.6 billion ($59.1 billion), compared with SAR 217.3 billion ($57.9 billion) a year earlier.

This metric measures the cash remaining after capital expenditures are deducted from operating cash flow. It benefited from a reduction in capital expenditures to SAR 134.2 billion ($35.8 billion), from SAR 140.3 billion ($37.4 billion) in the comparable period.

Oil Revenue in the State Budget

On the other side of the equation, Aramco's earnings growth was not mirrored by a corresponding increase in government oil revenue.

Ministry of Finance data showed that oil revenue fell 23% year on year in the third quarter to SAR 116.5 billion ($31.1 billion), compared with SAR 150.8 billion ($40.2 billion) in the same period last year.

Over the first nine months of 2026, oil revenue totaled SAR 446.3 billion ($119 billion), down from SAR 452.4 billion ($120.6 billion) in the corresponding period of 2025, representing a relatively modest decline of approximately 1.3%.

By contrast, non-oil revenue increased 8% during the nine-month period to SAR 412.5 billion ($110 billion), helping lift total budget revenue by 3% to SAR 858.9 billion ($229 billion).

In the third quarter alone, non-oil revenue rose 20% to SAR 142.6 billion ($38 billion).

The growth in non-oil revenue therefore helped cushion the impact of declining oil revenue on the government's overall income.

Third-quarter expenditure totaled SAR 343.4 billion ($91.6 billion), against revenue of SAR 259.1 billion ($69.1 billion), resulting in a quarterly budget deficit of approximately SAR 84.3 billion ($22.5 billion).

Why Don't the Figures Move in the Same Direction?

Part of the divergence between Aramco's financial results and government budget revenue stems from the different nature of the figures themselves.

The company's profits are recognized according to its accounting results, while budget figures reflect government revenue actually collected during the reporting period.

Moreover, the government's financial returns from Aramco's operations flow through several channels, including taxes, royalties and dividends, with differences in when these amounts become due and when they are paid.

Accounting profits do not necessarily translate into cash inflows during the same period. Liquidity is affected by the timing of receivables collection, inventory movements and operating payments.

This distinction is also evident in financial transactions between Aramco and the government, which are not limited to direct cash payments but include the settlement of certain mutual obligations through offsets.

For example, Aramco's cash income tax payments fell to SAR 2.8 billion (approximately $747 million) in the third quarter, compared with around SAR 51 billion ($13.6 billion) in the second quarter, as amounts due to the company from the government were settled by offsetting them against its tax obligations.

Under this mechanism, amounts owed to one party are deducted from what that party owes the other, rather than transferring the full amount in cash.

Such offsets affect both the volume of cash payments and the timing of financial transfers between Aramco and the government.

Consequently, government oil revenue does not necessarily move in the same direction as Aramco's financial results, since each is influenced by different factors and accounting mechanisms.

While the company's profits reflect its financial performance during a given period, government revenue recorded in the budget depends on the taxes, royalties and dividends due to the state, as well as the timing of their collection and settlement.

Aramco's profits may therefore increase during a period when government oil revenue is declining.

Overall, the results demonstrate Aramco's continued ability to generate strong profits and maintain substantial cash flows, supporting its capacity to sustain investment and distribute dividends to shareholders, foremost among them the Saudi government.

At the same time, growth in non-oil revenue underscores the importance of diversifying budget income sources to mitigate fluctuations in oil revenue, broaden the sources supporting public finances and advance the Kingdom's economic transformation.


Crypto Dips on Democrat Midterm Wins, Binance Hack Dents Optimism

Representation of cryptocurrencies are seen in this illustration taken September 10, 2025. (Reuters)
Representation of cryptocurrencies are seen in this illustration taken September 10, 2025. (Reuters)
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Crypto Dips on Democrat Midterm Wins, Binance Hack Dents Optimism

Representation of cryptocurrencies are seen in this illustration taken September 10, 2025. (Reuters)
Representation of cryptocurrencies are seen in this illustration taken September 10, 2025. (Reuters)

Cryptocurrencies briefly dipped on Wednesday as Democrats won majorities in both the Senate and House in the US midterm elections, a potential blow to an industry that has pushed for faster deregulation for digital assets.

The sector has spent more than $300 million backing crypto-friendly Democrats and Republicans in roughly equal measure during the current and previous election cycles, hoping to pass legislation US crypto companies say will ‌put them on ‌a solid legal footing and allow them to thrive.

Bitcoin ‌briefly ⁠touched a six-week ⁠low before recovering to trade roughly flat by 0715 GMT at $78,070. Ether traded at $2,292, up just 1%.

Bitcoin has fallen by around 41% since hitting record highs above $122,000 in October 2025, bringing the value of the broader crypto market to around $2.61 trillion, according to CoinMarketCap.

The market has lost some $300 billion in value in the last month alone, as deepening concern about future returns from AI and the ⁠strain of rising borrowing costs pushed investors into less risky ‌assets such as government bonds and ‌safe-haven currencies.

Sentiment has also been hurt by the $6 billion hack of the Binance platform last ‌week, the largest heist in history.

On Tuesday, Binance customers had withdrawn ‌a net $4.72 billion from the world's largest cryptocurrency exchange since it reopened following the hack at the weekend.

"The market may be re-evaluating the risk-reward profile of crypto assets. On one hand, the string of security incidents is forcing investors to re-examine the ‌industry's security infrastructure and custody risks," Tim Sun, senior researcher at HashKey, said.

"On the other hand, potential shifts in ⁠the US political landscape ⁠could stall the progress of structural crypto legislation and institutional framework development. All of these factors leave the crypto market facing strong headwinds," he said.

US President Donald Trump, who vowed to make the United States the "crypto capital of the world" during his 2024 presidential campaign, has made his own forays into digital assets, with the launch of his "Trump" meme coin, plus his family's World Liberty Financial crypto platform, among other ventures.

The sector has seen sweeping reforms in the almost two years since Trump returned to office, including lighter enforcement and the creation of a strategic bitcoin reserve.

Washington has also allowed for easier access to banking and exchange-traded products and passed a federal stablecoin law that could help these assets move into the mainstream payments and money transfer systems.