Still just a trickle of jobs out of London

Predicting Brexit is for mugs. London’s financial traders prefer binary outcomes with ascribable probabilities. Prime Minister Boris Johnson says the UK will leave the EU on October 31 “do or die”. But with or without a deal? On good relations or bad? Ipso facto, city job loss projections are equally perilous. Except maybe they will be less dramatic than feared.

In 2016, consultants Oliver Wyman suggested up to 75,000 job losses in a worst-case scenario. Bank of England governor Mark Carney has quoted similar figures.

On Thursday, however, consultants at EY reported only about 1,000 investment bank jobs have been relocated. The total number that “could” relocate was still only 7,000, even lower than the 12,500 foreseen six months after the 2016 referendum.

What’s wrong with Frankfurt, Paris or Dublin? The city on the Liffey has been the top destination for banks moving operations, EY says. Frankfurt’s pocket-sized [river] “Main-hattan” skyline has attracted investment bankers. London’s scale means a small loss of market share there can mean proportionately bigger gains elsewhere. But a trickle of jobs leaving London could turn later into an exodus. Uncertainty about Brexit outcomes has increased as the leaving date nears (or has it retreated?).

Pessimistic projections of job losses could still prove pertinent. Oliver Wyman says its worst case could take years to transpire and depends on a host of political, regulatory and tax decisions. Staff may simply be cut.

For now EU clients can still choose to trade through London or Paris. The former’s deeper financial market liquidity makes for better pricing. The latter is better for underemployed staff on long lunch breaks. Relocating staff is costly. Reversals would be costlier still, especially if bankers’ desire to live in Frankfurt has been underestimated. /London, September 20

© The Financial Times 2019