The City of London should emerge largely unscathed from Brexit even though thousands of banking and insurance jobs could move to the continent, the financial district’s policy chief said.
The “City” or “Square Mile,” home to over 250 foreign banks and the Lloyd’s of London insurance market, faces upheaval as firms decide whether to shift jobs to continental Europe to keep serving customers there after Britain leaves the EU in 2019.
Mark Boleat, head of policy at the City of London, the local government that administers Europe’s biggest financial center, said talk of a massive exodus has been mistaken.
“If it was going to be Armageddon, we would have noticed it by now,” Boleat told Reuters in an interview in a room off the local government’s seat of power in the medieval Guildhall.
“They are never all going to up sticks and leave … We expect the steady flow of new business coming in.”
This contrasts with harsher predictions, such as a report from EY consultancy forecasting a loss of 232,000 jobs financial jobs in Britain as result of Brexit, though with many of those from other parts of the country.
Boleat steps down in May after five years in the job that included confronting protests against corporate greed and being at the heart of industry efforts to respond to Brexit, which threatens to cut off London from mainland Europe.
He predicts even in the worst-case Brexit scenario resulting in tens of thousands of financiers moving from Britain in a decade, the City – where 360,000 people are employed – will end up with the same number of jobs.
“Our projection for employment in the City is that in the next 10 years there will be another 50,000 jobs or more,” Boleat said, mainly in IT and professional services such as accounting and law. “If with Brexit we lose 50,000 jobs, we end up where we started.”
He said the commercial property market was a bellwether of the City’s resilience and that it was “holding up pretty well.” He pointed to a decision taken since the referendum to go ahead with a 59-story skyscraper.
“What is significant is they are building it. It is a building without a tenant. A building of that size is clearly quite risky,” he said.
Boleat does not speak for all of London’s financial sector, however. The capital’s other main financial area, Canary Wharf, is home to about 112,000 jobs.
Change in Tone
Boleat spoke of a rollercoaster ride of emotions for banks since June 23, when Britain voted to leave the EU.
Initially, the sector hoped to keep “passporting” rights to offer services across the bloc from a single base in London. But after a few months it became clear that Britain would give up unfettered access to single market to restrict immigration.
He said the low point was at the ruling Conservative Party’s annual conference in October when Prime Minister Theresa May criticized big business and “citizens of nowhere,” widely interpreted as an attack on an international-minded elite.
“That speech was aimed at the Conservative Party and it was a pity that other people heard it,” Boleat said.
May’s letter to the EU on Wednesday to kick off formal divorce talks set a more “helpful tone” by singling out financial services and the need for transitional arrangements, he said.
He senses the government is becoming more pragmatic ahead of what are likely to be tough negotiations with the EU.
“Maybe there is an increasing recognition that … the other side can be bolshy and we need good relationships to get the right result,” Boleat said.
“We have found the Treasury very good indeed. No complaints at all … The issue is whether they can get their voice heard in Number 10 (the PM’s office), where any trade-offs are needed,” he added.
Attempts to encourage European companies to warn their own governments about the economic impact of loss of access to the London’s financial sector have made little headway, Boleat said.
“One thing I have learned is that we shouldn’t be looking a great deal of help from European corporates. They are as committed to the EU project as their governments.”
A company like BMW is far more worried about supply chains and tariffs, rather than market fragmentation or more expensive derivatives, he added.
(Reporting by Huw Jones and Andrew MacAskill; editing by Pravin Char)
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