Global Economy: US losing its grip on Europe: Why Wall Street fought so hard against Brexit - by Renae Merle

For decades, Wall Street has considered London a beacon through which it could reach the rest of Europe. Large U.S. banks moved thousands of employees there to trade currencies and complex financial products. A couple of years ago, Goldman Sachs began building a massive new headquarters to house its 6,000 employees in the city.

But Britain’s stunning vote on Friday to divorce itself from the European Union has thrown London’s status as Europe’s financial center into question -- and with it, the city’s relationship with New York bankers.

From London, Wall Street has been able to sell its services across 28 nations without the headache of having to get regulatory approval from each individual country. The prospect of a more complex, and potentially costly, regulatory structure has some banking officials worried, analysts said. U.S. banks could move more than 10,000 employees out of London after Britain completes its exit from the European Union, according to Keefe, Bruyette & Woods, a boutique investment bank.

"U.S. banks have used London as a primary center for activity, not only to operate in the U.K., but to provide services across Europe," said James Chessen, chief economist for the American Bankers Association.

The shock of the British vote tanked U.S. markets Friday with the financial sector taking among the toughest hits. Goldman Sachs and JPMorgan Chase were both down 7 percent. Morgan Stanley tumbled 9 percent.

Britain's exit is also expected to impact other U.S. industries. Technology firms have jousted before with European regulators, but that process could become more complicated as  populist leaders call for referendums in France and the Netherlands to leave the EU, as well.

On Friday, shares of Apple fell 2.5 percent. Alphabet, Google’s holding company, lost 3.5 percent and Yahoo and Microsoft were each down about 4 percent.

In energy stocks, BP was trading down 5 percent, and Shell, domiciled in both Britain and the Netherlands, was down 6 percent after news of the “Leave” vote. American crude oil prices dropped $2.54 a barrel, or 5 percent.

Oil prices stiffened in the weeks leading up to the vote, as the “Remain” camp surged in polls. The Brexit caught investors by surprise. They rushed to sock assets away in non-eurocentric currencies and products, opting for American investments instead, or staying out of the market completely.

But the impact on U.S. banks is expected to be among the most severe, and the industry was both vocal -- and aggressive -- in its opposition to Britain leaving the EU.

Goldman Sachs and JP Morgan Chase, the country’s largest bank by assets, contributed 500,000 pounds, then about $720,000, each to the campaign to keep the status quo in the European Union, according to people familiar with the matter. Citigroup and Morgan Stanley donated 250,000 pounds each, according to the Sunlight Foundation.

On Friday, U.S. banks quickly began to draw up plans to deal with the fallout.

Citigroup created a "group of senior leaders from across our businesses and functions to ensure we were prepared for this possible outcome," Mike Corbat, the bank's chief executive, and Jim Cowles, its chief executive in Europe, Middle East and Africa, said in a letter to employees. "While the result of the vote is not what we would have preferred, our diligent work over the past six months means we can be confident that Citi is well positioned to serve our clients."

Britain's finalization of its exit from the E.U. is expected to take at least two years, and banking industry officials say they will carefully watch the process for clues into how vast the fallout will be. Britain, for example, may be able to establish a financial regulatory framework that is harmonious with the rest of Europe. That would minimize the potential impact, analysts said. But if that is not possible, banks may be forced to move jobs to Frankfurt or Dublin, they said.

"Likely London will lose some influence," Erik M. Oja, equity analyst for S&P Global Market Intelligence. But it depends on the negotiations that will occur over the new few years, he said:   "These banks have invested a lot into the London hub, it’s not like they will move overnight."

On Friday, JPMorgan Chase CEO Jamie Dimon told employees in a memo  that the bank will maintain a large presence throughout Britain. "In the months ahead, however, we may need to make changes to our European legal entity structure and the location of some roles," Dimon said. "While these changes are not certain, we have to be prepared to comply with new laws as we serve our clients around the world."

Read more: Why Wall Street fought so hard against Brexit - The Washington Post

Britain: First, the Brexit. Now the United Kingdom is falling apart - by Ben Wellings

Britain: Playtime is over

Britain’s decision to leave the EU is a major moment in post-War European history. This is like the collapse of communism, but with the West on the losing side. It is the first defeat for the British Establishment for centuries.

It is hard to believe in the wash-up of the referendum campaign but this was meant to be cathartic. It was supposed to heal divisions within the Conservatives by giving the people of the United Kingdom a say on membership of the European Union. But it has only entrenched and exacerbated divisions rather than healed them.

Referendums are not compulsory in the UK. Any decision to hold one is essentially political. Usually, you only initiate referendums that you are certain to win; Brexit has altered the rulebook.

What was proposed as a catharsis has induced trauma: trauma that the process and politics of Brexit will do little to repair. The referendum campaign laid bare deep divisions within the United Kingdom.

Other divisions were evident: between young and old; city and country; men and women. The biggest division that this exposed was between the so-called ‘winners’ and ‘losers’ of globalization and European integration: those who have done well out of these political structures and those who have not.

The disbelief amongst the ‘winners’ that Brexit might have been a realistic and attractive prospect was matched amongst the ‘losers’ by anger directed at the prosperous and secure classes.

 Perhaps the most pernicious division was between politicians and people. The murder of Jo Cox was not only a horrific attack on an individual striving for what she saw as the good society. It was an attack on democracy. Her example showed that not all politicians are remote fat cats in thrall to big business. Politicians still hail from the deprived areas in which they grew up, lived and worked.

Of course, direct blame cannot be laid at the door of the Brexit campaign. But in adopting UKIP’s anti-immigration language, Vote Leave’s leaders subordinated some principled critiques of the EU’s failings to a xenophobic politics of fear.

The referendum campaign deepened existing divisions within the Conservatives, from which they may not recover for years. Cameron’s position is surely untenable. BoJo is waiting in the wings.

The Labour Party under Corbyn was missing in action during this campaign, hoping that the Conservatives would hang themselves whilst Labour’s own internal divisions were overlooked. Many former Labour voters opted to leave and the party must answer questions about how its successive leaderships became so divorced from grassroots opinion.

The main beneficiary of Breixt is UKIP. Its message dominated the last three weeks of the campaign and will shape discussion about national identity, inclusiveness and tolerance in England for years to come. There are calls for it to disband having achieved its central aim. But the wind is in the sails of HMS UKIP and we should expect it to change into an established right populist party, ironically making British politics look much more ‘European’ at the very moment when it left.

The term ‘England’ is used advisedly since this was in many ways an English revolt. Outside of London it was rural England and, admittedly, Wales that dragged the UK out. Whether Scotland will abide this remains to be seen. Northern Ireland’s situation is similarity unsure.

There will always be an England; whether there will always be a United Kingdom remains far from clear.

For the first time in history the process of European integration has been reversed. The idea that Brexit will represent ‘the end of western political civilization’ as Donald Tusk claimed may have been alarmist. But Brexit is part of a wider revolt against the established political order whereby the ‘losers’ in the globalized economy are given voice by rich tribunes, be they Old Etonians, City stockbrokers or New York property magnates. This is their first major victory.

Brexit is the product of a revolt against the way that people have been governed in the past thirty years. This was its sole unifying function. It united left and right against the political ‘elite’, ushering in the first defeat for the British Establishment since the loss of the American colonies.

It is hard to be optimistic about this referendum and the politics that it unleashed. The Scottish independence referendum in 2014 was seen as a laudable exercise in democracy. In contrast the Brexit referendum revealed an angry and ugly streak in political life, especially in England.

The United Kingdom is a divided country. It may have won its independence or have made a catastrophic error, depending on your point of view. The fact that it took a xenophobic campaign to achieve this result is nothing to be proud of.

This foundational moment will be tainted with shame for decades to come.

Read more: First, the Brexit. Now the United Kingdom is falling apart - The Globe and Mail