Based on Theresa May’s Brexit stance, most large banks in Britain are working on the assumption that that the most likely outcome of Brexit will be Britain losing its access to EU’s single market and resulting in ‘Hard Brexit’.
As per sources from sources, an exodus of financial jobs is set to take off within the net two years, with some of the largest global banks that had put down roots in London’s financial district set to move out 9,000 jobs to the EU.
Last week, JPMorgan and Standard Chartered were the latest global banks to outline their plans of moving financial jobs to the European Union, following Brexit.
They are among a growing number of banks and lenders who are set to move their London operation to cities in the EU.
Lloyd Blankfein, Goldman Sachs’ chief executive stated in an interview last Friday that London’s growth as a financial center is likely to “stall” as a result of Brexit.
Already thirteen banks have firmed up their plans to relocate their London operations to the EU to secure market access to the bloc’s single market with discussions with Europe’s financial authorities being underway since months.
“It’s full speed ahead. We are in full motion with our contingency planning,” said the head of investment banking at one global bank in London. “There’s no waiting.”
The move however represents just 2% of London’s finance jobs, nevertheless Britain’s tax revenues could take a significant dent if it continues to lose grip over financial services.
According to the Institute for Fiscal Studies, a think tank focused on budget issues, British taxpayers may have to shell out more funds to the exchequer if the country’s top earners continue to move out.
The full impact of financial jobs moving out of Britain will be determined by the terms of agreements Britain signs with the EU. Some politicians have however alleged that banks are exaggerating Brexit’s threat to the British economy.
According to two separate reports prepared by Ernst & Young and Oliver Wyman, finance-related job losses are expected to be in the range of 4,000 to 232,000.
England’s central bank has given finance companies a deadline of July 14 to lay out their plans.
This is a strategic step taken by the central bank. As per a senior bank executive at a large British bank, forcing companies to make a plan will most likely result in them sticking to it.
“It is an unintended consequence, but the more and more preparation you do the more likely you are to execute those plans,” said the executive.