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  1. ITV Report

Brexit: Luxembourg hoping to capitalise on potential loss of financial services jobs in City of London

The cranes are up and construction workers hard at work.

Luxembourg isn't waiting to see if Brexit turns out badly for London's renowned financial services sector. It is already building office space on the assumption that it will.

It believes, as do many others, that Britain's exit from the European Union will lead to a mass exodus of financial services jobs from London.

All this just two years after the capital city overtook New York as the world's financial capital.

For rival financial centres, Brexit is a potential gold mine. And Luxembourg wants its share.

Luxembourg is hoping to benefit from the potential loss of financial services jobs in London. Credit: ITV News

Financial technology firm PPRO says it cannot afford to wait and see if Article 50 negotiators can get a special deal for the City.

It wasn't a decision it wanted to take, but as many as 200 jobs will now be created in Luxembourg and elsewhere, rather than London.

"The UK and London in particular is just a fantastic place for a financial services business to operate from," said PPRO chief executive Simon Black. "We're in the payments business and you have talent here, experienced people.

"This is not an action we would have remotely considered without Brexit."

But why?

Financial technology firm PPRO is creating 200 jobs in Luxembourg and elsewhere. Credit: ITV News

The European Central Bank has made it clear that post Brexit, Britain will not be able to access the passporting system, which allows financial firms to trade freely across the EU.

The reason is simple. To benefit from it, countries must remain a member of the European single market - something Theresa May has ruled out - and abide by its rules, including the free movement of people.

Exiting the single market would cost Britain's financial services sector £38 billion, deal a £10 billion blow to Treasury's coffers and place 75,000 jobs in the firing line, according to think tank TheCityUK.

Banks have issued the lion's share of the warnings over job losses, claiming the loss of passporting rights would force them to set up new operations on the continent and migrate staff out of the capital.

US banking giant JP Morgan said 4,000 jobs would leave the UK, Goldman Sachs threatened to move 2,000 roles and HSBC said it would transfer 1,000 positions from London to Paris following the Brexit vote.

Meanwhile AIG is looking to move a string of London-based executives to Luxembourg to head up a new EU subsidiary, while Lloyd's of London is thought to have also picked Luxembourg as the frontrunner on a shortlist of five sites for a potential a EU operation.

But it is not just the Luxembourg government hoping to take some of London's business.

There are fears for 75,000 jobs in the City of London as the Brexit process gets underway. Credit: ITV News

Paris, Amsterdam, Madrid, Warsaw, Dublin and Frankfurt each want a slice of London's pie - and none have an interest in compromise that would make life easier for the City.

Some in London hope that damaging it as a source of finance would hurt the EU as well, making a deal in everyone's interest. But others aren't convinced.

Former Financial Services Secretary Paul Myners told ITV News: "I think it's a greater threat to us.

"We are at a very weak position as far as negotiation with the EU is concerned in protecting London's dominance of finance in the European Union."

That negotiation begins in earnest on Wednesday, as Article 50 is finally triggered.

Over to you, Mrs May.