Unless the British government can retain passporting rights for its financial sector, some of the world biggest bankers have warned that the country could see an exodus. The question of whether Theresa May will be able to retain Britain’s financial might depends on the negotiating prowess of her negotiators.
In a development that could significantly impact London’s financial district and Britain’s service economy, top bankers have warned that unless there is clarity as to whether Britain will retain access to EU’s single market bloc, they could start moving staff abroad as early as 2017.
Many senior executives from European division of some of the world’s biggest financial institutions have made their views clear in a conference in London that Theresa May’s tougher rhetoric on immigration risked harming the British economy.
James Bardrick, the UK head of Citi, a U.S. bank, said the dilemma facing the finance industry is the urgency to act on contingency plans aimed at protecting their businesses, following Britain’s historic vote to leave the European Union.
“How do we and when do we start making decisions … knowing the plan is ready to go … it could be in the first quarter of 2017,” said Bardrick in the conference.
The British Prime Minister, Theresa May, had earlier stated that she will trigger the divorce process by the end of March 2017. The statement appears to be prioritising the capping of immigration over retaining access to the EU’s lucrative single market bloc.
London has been Europe’s financial centre. Brexit has put its future at stake. This is likely to be a major negotiating point in May’s talk with the EU.
Major banks are keen to retain the “passporting” rights which allow them to sell financial services across EU’s single market bloc.
Access to EU’s single market is key
Rob Rooney, Morgan Stanley international’s CEO stated that the continuation of his bank’s operations in London was contingent on the passporting rights.
“It really isn’t terribly complicated. If we are outside the EU and we don’t have what would be a stable and long-term commitment to access the single market then a lot of the things we do today in London, we’d have to do inside the EU 27,” said Rooney to delegates at the conference.
Tim Roberts, the managing director of the Promontory Financial Group, a consulting firm, stated London began to rival New York as a financial centre in the 1980s only because it welcomed people regardless of their nationality or gender.
“If we lose that, and we allow not Brexit itself, but some of the sentiments expressed nationally that led up to the referendum to erode that culture then I think it damages London as a financial centre,” said Roberts.
John Nelson, the chairman of the Lloyd’s was critical of the tone used by May’s ministers saying Britain risked turning its back on the global economy for the first time since World War Two.
“We have to be very clear that the rest of the world is looking very, very closely right now,” said Nelson.
“We have to be careful that we keep the UK open… and making sure we are able to attract the right talent globally. If we don’t do that we will not remain the financial sector that we are today.”
The British government was forced to backtrack on a recent proposal which demanded that companies list their foreign workers. An outcry from business groups made it amply clear that the strategy to “name and shame” employers would be counter-productive since it is divisive and discriminatory.