After Brexit, a splitting hangover for London

Luke Hickmore had an aperitif Thursday night, watched the early results on Britain's vote to leave the European Union and went to bed. He didn't sleep long.

Hickmore, 46, helps oversee $13.7 billion for Aberdeen Asset Management(AAM), a global investment firm. He switched on his television at 3.30 am, and said he thought, "Hang on a second, this doesn't look like it's going to go the way the market priced in."

Twelve hours later, at his desk, he said, "It's a strange feeling." A colleague in Australia had even sent him some Algerian Tuareg desert blues music to get him in the right frame of mind. Hickmore started in the business in 1987. In a span of few hours on Friday after Britain voted itself out of the EU, the pound had fallen to its lowest point since 1985. "It feels a bit unreal."

Thirty years ago, Margaret Thatcher spurred a wave of financial deregulation known as the Big Bang that cemented London's place as a world financial centre to rival New York. But in the wake of the "Brexit" vote, there is a double uncertainty hanging over the finance industry that is the city's economic engine. While there is the usual stress over the market's gyrations, this time it is coupled with an even greater unease about what the future will hold for London as a financial capital, amid repeated warnings that tens of thousands of jobs will move to continental Europe.

The financial district stretches from the stately offices of hedge funds in Mayfair to Canary Wharf, where glass-and-steel bank headquarters have replaced abandoned docks. But its heart, Britain's version of Wall Street, is known as the City of London or simply "the City," referring to roughly a square mile where you can find the old walls of Londinium, the city built by the Romans. Brexit is on everyone's mind, as bankers absorb a second Big Bang as profound as one three decades ago, though one without a road map forward.

After the tumult of Friday, bankers, traders and other finance types could be found at the Pavilion End, a City pub in the shadow of St Paul's Cathedral. A group stood outside the pub, as is the custom in London when the weather allows. Some had their jackets off, white dress shirts and suit trousers with ties, and held pints of beer as they pondered where the City's jobs might move, Paris, Amsterdam and Frankfurt seemed the most likely. But few seemed excited about the prospect of living there. "There's no confidence; it's been shredded," said Andrew Towill, 28, one of four employees of a multinational real estate consultancy who were also standing outside the Pavilion End. Anna Benjamin, 50, said not much was different on Friday in their business "because we're dealing with projects that are ongoing. But there is a definite feeling that once they start coming to an end, where is the next one coming from?"

John Lowes, 35, said there was a general "feeling of real concern." "Now what happens? We just don't know," he added.

The group worried about returning to the kind of conditions they faced during the financial crisis. "We don't want to go back to that," Robert Harper, 37, said. "There were times when I had nothing to do." As with every financial shock, there are winners and losers.

Crispin Odey, the pro-Brexit hedge fund manager who once built a Grecian temple for his chickens, had a hefty 15 per cent gain in his flagship fund after placing big bets on gold and against the market. George Soros, the billionaire financier, appeared well positioned, having recently made similar bets, though he also prophetically warned against the fallout from a Brexit vote and lamented the outcome.

Many of the less well-to-do will suffer. While older voters led the charge for Brexit, the value of their pensions took a hit along with the British stock market and economy.

Executives described a tense night on trading floors. At Goldman Sachs, there was activity on the London floor throughout the night, with TVs blaring referendum returns. In a note to JPMorgan Chase employees, Jamie Dimon, the chief executive, said the firm "processed 1,000 trading tickets per second at one point," many times the typical trading volume. The chief executive at Citigroup in New York, Michael Corbat, personally walked the trading floor, a relatively rare move for a Wall Street chief these days.

It will take days and months to sift through the ramifications for the markets and the City, as Britain negotiates its post-Brexit relationships and global financial firms figure out their next steps. The aftermath of a Leave vote was predictable in many ways, unforeseen in others.

©2016 The New York Times News Service