Wall Street bosses have delivered a new and relevant perspective on Brexit. JPMorgan Chase CEO Jamie Dimon says that Brexit makes the likelihood of the eurozone failing five times higher while Morgan Stanley CEO James Gorman says that New York could be the ultimate winner once the divorce is finalised. Both comments were made at the annual meeting of the Institute of International Finance in Washington.
This suggests that despite pre-referendum warnings of Brexit job losses in the City – and they could still happen – large American banks are not particularly enamoured with the alternatives.
It also implies that if these banks really could operate their EU services from New York under equivalence rules, then London will be able to do so as well.
But of course London is at the start of a highly politically charged negotiation, which unless it is successfully resolved will harm both the UK and the eurozone. In that case, New York could definitely be the winner.
It is possible to interpret both the hardline coming from UK prime minister Theresa May and that of French president Francois Hollande as opening salvos at the opposite end of the spectrum. Compromise will be somewhere in the middle. But the Dimon point is somewhat different. The EU can play hard ball with the UK and cause plenty of damage but it is foolish to think – as commission president Jean-Claude Juncker does – that such an approach will save the rest of the EU.
Populist forces in France and Italy will remain as strong and the chances of another Greek-style crisis, perhaps in Italy, will not have abated. To get these issues resolved, EU leaders would have to start from quite a different place – by taking responsibility for the problems and by stopping repeating the mantra that fundamental principles of the single market cannot be broken – of course they can with the political will.
Will this message from Wall Street be any more likely to be heard than those in Europe? It's very unlikely but Jamie Dimon should not give up trying.
Brian Caplen is the editor of The Banker.
