Undefined Brexit deal ‘puts finance sector at risk’
● Stock exchange chief warns over exodus of 232,000 jobs amid uncertainty
The UK’S financial sector would face heightened risk and an exodus of 232,000 jobs without certainty over Britain’s Brexit deal, MPS heard yesterday.
Xavier Rolet, chief executive of the London Stock Exchange Group (LSE), warned two-thirds of the job losses would be felt outside Greater London, a prediction that led to SNP politicians urging the UK government to take action to protect the Scottish financial sector.
Mr Rolet said job losses would occur as soon as the euro-clearing operation leaves Britain’s shores.
Euro clearing – which involves processing transactions for firms across the EU in euro-denominated assets – has been a large and important part of the City’s operations.
Speaking to MPS on the Treasury select committee, Mr Rolet said the jobs figure came from a report produced by professional services firm EY for the LSE, which not only took into account the “few thousand” jobs lost from euro clearing itself, but the entire impact on financial services if the operation was moved outside the UK. “Its not the level revenue or the number of jobs created by the underlying activity that counts.
“It is the onwards upstream and downstream strategic relevance of the business for the trading, syndication, distribution, risk management, IT, as well as Treasury management of corporate insurers.”
He said the report found that “as far as the entire United Kingdom is concerned, 232,000 jobs would be at risk or likely to be lost”.
Mr Rolet warned that the EU was already singling out the UK to conduct its euro-clearing operation in a way that does not effect other countries, such as the US or Japan.
He said the EU could take the “momentous decision” to claim the euro-clearing business via treaty or regulatory changes, or through the introduction of minor rules that have a far-reaching impact.
“I think it is to no surprise that almost a few days after the outcome of the referendum was known, one of the leaders of the continental European countries, out of the blue, claimed not manufacturing, not agricultural
products, not wine and cheese-based industries, startups or fintech, [financial technology] but focused on clearing as he thought of the business to claim back.”
The SNP’S Westminster Treasury spokesman Stewart Hosie said: ‘’The UK government’s failure to have any kind of Brexit plan is potentially catastrophic for financial services throughout the UK.
“Theresa May’s continued insistence seven months on from the referendum that she will not have ‘a running commentary’onnegotiationpreparations also means there will be little or no public debate or sharing of information in those areas where the UK government really needs to put up a fight.
“Theresa May clearly has no negotiating position and that beggars belief. Any loss of jobs that results from this – in London, Edinburgh, Glasgow or elsewhere – will be the direct consequence of her government’s dithering approach.’’
Mr Rolet’s comments came as Douglas Flint, group chairman of HSBC, said the bank may take “pre-emptive action” to move jobs to France, the Netherlands or Ireland before the Article 50 process is complete, but would wait longer before “pushing the button” on the move.
“If you have already established an operation in the EU you can take your time to decide whether or not to move quickly, seeing how the negotiations flow,” Mr Flint said. “But a bank like us with operations all over the EU including a significant full-service bank in France, you can take even longer to decide when to push the button.
“Nobody wants to push the button because the best outcome for everybody is the preservation of the status quo in so far as is possible.”
Banks have issued Brexit warnings, claiming thousands of jobs would shift to rival financial centres across Europe and the US if Britain loses the right to sell financial services to the EU. JP Morgan
STEWART HOSIE
said 4,000 jobs would leave the UK, Goldman Sachs threatened to move 2,000 roles if Britain loses passporting rights and HSBC claimed it would transfer 1,000 positions from London to Paris following the Brexit vote.
Mrs May’s spokeswoman said: “Where we can provide more certainty, the PM and the government has sought to do so, while also being clear that we are not going to tie our hands in a negotiation.”
“The UK government’s failure to have any kind of Brexit plan is potentially catastrophic for financial services throughout the UK”