Government expects 5,000 Brexit job losses for the City

10-Oct-18


The government expects the City of London to lose 5,000 jobs because of Brexit, the City minister said today.

John Glen said he backed the estimates of the head of the Prudential Regulation Authority, Sam Woods, on the number of job moves at a hearing of the House of Lords' EU Financial Affairs Sub-Committee.

Large financial services firms across the Square Mile have for the most part now put in place plans in case the UK leaves the EU without a deal, widely seen as a worst-case scenario by businesses. However, the number of job moves has been smaller than initially expected, with many firms trying to move the minimum employees to satisfy EU regulators, at least in the short term.

Chris Cummings, chief executive of the Investment Association, which represents firms managing trillions of pounds of assets, this week said there was now "greater confidence" that London will remain the "pre-eminent destination" for big investor houses.

However, if no deal is reached British-licenced firms would lose the "passport" giving access to EU markets overnight. Many City executives expect a no-deal Brexit to trigger significantly larger numbers of job moves by US and Japanese banks in particular.

The City minister said that job moves so far had been "a very stable situation", and that he does not "expect that to change in the event of a deal, which I anticipate."

Glen pointed to comments by the governor of the Bank of Japan that "no single EU city could attempt to replicate the ecosystem that is the City of London".

"My sole objective with respect to the City is to ensure as much continuity as possible with respect to the economic value that is generated by the City," he said.

Yet the government has committed itself to a course which concentrates on negotiating a bespoke arrangement on trade in goods, while leaving the UK with essentially the same access to the EU as other non-EU countries today for services, with significantly higher barriers to trade.

Glen pointed out that financial services employ one in 14 people in the UK and contribute £72.1bn in taxes, underlining their importance in negotiations, but added that the government had been "pragmatic" in abandoning a "mutual recognition" approach which would have pushed for closer co-operation on financial services after the UK leaves the EU.

He said: "This isn't a defensive situation. We have got to negotiate a deal with the EU which gives the stable, long-term bilateral relationship with the EU institutions and bilateral bodies that City institutions require, but we must also examine where we can open up global financial partnerships."