According to a tally being kept by London Communications Agency, about 10,000 jobs so far appear to be heading out of London for different places in Europe as a result of Brexit. It isn’t one-way traffic: German engineering giant Siemens has said it still intends to invest more in the capital and Qatari investors have said that they are undeterred by the UK’s intention to leave the EU. But Goldman Sachs and Morgan Stanley have followed HSBC, UBS, Bank of America, Barclays and others in saying that they will move some of their operations elsewhere, with Dublin, Frankfurt, Madrid and Amsterdam among likely beneficiaries. How bad might things get?
Where the finance sector is concerned, a Brussels-based think tank thinks the figure could reach 30,000. The chief executive of the Stock Exchange, referring to research by Ernst and Young, has said the number could rise as high as 230,000 if there was lack of clarity about an exit deal or if that deal looked likely to be unfavourable. Mark Boleat, policy chairman of the City of London Corporation, has spoken of anywhere between 4,000 and 70,000, depending on the type of Brexit secured. According to industry lobbyists TheCityUK, London has around 750,000 people employed in financial services and related professional occupations.
Last week, Boleat gave an interview in which he set out how the damage might be limited as Article 50 was triggered by that letter from Theresa May. Here’s the bulk of what he said:
The reaction from institutions and from the markets is: “This is what we expected.” We know there’s a fairly bumpy road ahead. We’re very much hoping we can negotiate the right sort of arrangement longer term. We’re very pleased there’s recognition of the need for a transition period, that’s really important.
We would like to maintain as near a relationship as we’ve currently got. We would like institutions that are based in Britain to be able to operate throughout the European Union and those in the European Union to operate in Britain. And indeed, I think that would be the wish of the government. On the other hand, it’s got other objectives which mean that might not be attainable.
So financial institutions are preparing, really, for a worst case scenario – assuming no special access at all, while hoping that that won’t be the position. That’s why the transition is so important. If significant changes have to be made by businesses in how they do business, they need time.
The other key point to us – where we are already masters of our own destiny – is on talent. Britain, and particularly London, needs to be open to talent from throughout the world. So we need to make sure that we maintain that access to talent that we currently have and don’t limit it through policies that might limit the number of people who can come to the country.
Asked if Frankfurt and Paris were going to steal our business, he replied:
They would like to attract business from London – of course they would. But they’re not going to attract business by public relations campaigns or cocktail parties in London. Businesses look at the substance of the various locations on offer. They will look at what they can do in London, even if we’re not in the European Union. They will look at a number of other locations and they will choose whatever is best for their business.
London currently offers by far the best operating environment. There are a few downsides: it’s expensive and housing costs are a real problem. We’ll lose one of the advantages when we’re not in the European Union, but we’ll still have many others and I think businesses in London will be seeking to adapt as best they can and that we’re going to retain most of the business that we currently have.
Does Boleat regard the City as the UK’s Brexit talks trump card?
I’m not certain about that. While we think that the City is an asset for the whole of the European Union, and I think many countries and many corporates agree, there are some who take a rather different view. They would rather have their financial services in their own country.
Can we say it is very important for other countries to agree a good deal for financial services? We certainly hope the government will try that argument and we will be helping that in every way we can. We talk to as many European countries as we can to make the point that this is not about protecting London, it’s about protecting financial markets that serve the whole of the European Union.
The City Corporation wanted to remain in the EU but, as Boleat has put it, “on June 24 we moved on”. How many financial sector jobs move out of the London looks to be very much in the balance. You can hear Boleat’s interview here.