Brexit and the ties that bind: how global finance shapes city-level growth models

Abstract

This paper contributes to the Growth Model (GM) research program in comparative and international political economy by analyzing the impact of Brexit on London and other financial centers within the European Union (EU). Our key contribution is to demonstrate that for many countries, national growth models are really city-level growth models, and that this is directly observable in the relationship between GMs and their international financial centers. Such city-level GMs are possible precisely because they do not depend on, nor are they deeply integrated into, the rest of their national economy. To explain these observations, we draw upon insights from economic sociology and argue that ‘place-specific social capital’ and professional ‘linked ecologies’ make such internationally oriented city-level GMs highly robust to external shocks–even one as big as Brexit. Empirically, we develop this argument using financial firm-level data to observe the post-Brexit movement of assets, loans, and jobs in London, Dublin, Amsterdam, Paris and Frankfurt. We conclude with some observations on what a city-level GM perspective means for the study of comparative and international political economy.