Brexit uncertainty has made London less attractive to internationally-mobile high net worth individuals, a report by Swiss wealth manager Julius Baer has found.
The city’s place on Julius Baer’s lifestyle index stayed static this year, which the report said was “probably due to Brexit-related uncertainty and because sterling is down approximately 20% on its pre-2016 levels”.
The UK capital remained in eighth place on the list of 25 cities globally — making London one of only two cities in the Europe, Middle East and Africa region that did not rise in the rankings. The report looks at the prices of luxury goods and services around the world to analyse HNWIs’ consumption patterns and lifestyle considerations.
The French capital Paris climbed to seventh place just behind Switzerland’s Zurich, which increased to sixth. The region is now the second most expensive after Asia in the index.
The end of the Brexit transition period on 31 December 2020 brought with it changes to immigration rules, a key factor in London’s static place in the ranking. European Union citizens now have to apply for a visa to work in the UK and can only stay in the country for a limited amount of time as tourists.
This is likely to have a “negative impact on the numbers of internationally mobile families that move to the UK”, the report said.
David Kohl, Julius Baer’s chief economist, said Frankfurt has won where London has lost out.
“The decision to locate the European Central Bank in Frankfurt has further accelerated the city’s multicultural diaspora and its importance as an international financial hub,” he wrote. “This is expected to increase as Brexit has led many firms to move away from London.”
Another concern for HNWIs and their families in London is the “potential changes to the personal and corporate fiscal environment following high levels of government borrowing to manage the pandemic,” said Alan Hooks, head of private clients at Julius Baer International.
In the global ranking, Shanghai tops the list as the most expensive city in the index, nabbing the top spot from Hong Kong which slid to third place and Tokyo is now in second place. Data, including the price of degustation dinners, treadmills, health insurance and property, for the report was collected between July and September 2020.
Another trend identified in the report is the move towards private jets since the beginning of the pandemic last year. “Premium travellers post-Covid-19 are seeking more space and privacy as they prefer to remain in tight bubbles to avoid possible future infection,” the report reads.
The British government on 9 April outlined its plans to restart international travel from the country as it lifts Coronavirus restrictions in four stages. The UK’s transport secretary Grant Shapps announced a traffic light system that would determine which countries UK travellers could go to without needing to quarantine upon their return. The earliest date travel could recommence is 17 May, according to the government’s plans.
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