“Nothing is agreed until everything is agreed.” This phrase, deployed by politicians both here and on the continent, is one we have grown accustomed to hearing as the Brexit negotiations unfold. But for the City, and the broader financial and professional services industry, it doesn’t particularly help.
We know that businesses are resilient. A good business can by and large survive most things that are thrown at it. But really businesses need certainty. They need to know what is coming down the line so they can prepare accordingly, identify risk and work on their contingency plans. Meanwhile, Brexit is drawing ever closer and poses countless unknowns. As recent reports have made clear, a deal on financial services is not yet guaranteed.
The financial and professional services sector is a mainstay of the UK economy—and a large proportion of its activity is concentrated in the City. In the year to March 2017, financial services paid £72.1bn in tax, equivalent to nearly two thirds of the education budget. When including professional services, the sector accounts for 2.2 million jobs in the UK, and one third of these are found in London.
Clearly Paris, Frankfurt and host of other European cities are vying for the City of London’s business. Regulatory changes, tax reforms and big marketing campaigns are just some of the ways they are trying to do this.
There have been numerous studies which have looked at potential job losses for the City. The figures we use, produced by Oliver Wyman, vary from the best case of 3,000 if firms still see a “high access” scenario when doing business with the EU27 after Brexit, to the other end of the scale with 75,000 associated jobs at risk if we see limited access to the single European market. As we are no clearer on what sort of deal we will get, all scenarios are a possibility. At the moment the number of confirmed jobs moving is in the hundreds category—although clearly, largely because regulators require them to, firms have been preparing for different eventualities.
“Paris, Frankfurt and host of other European cities are vying for the City of London’s business”At the City Corporation we have been working in partnership with a wide array of City institutions making the case for an agreement with the EU that delivers the three pillars of transition, talent and trade—what we call the three Ts.
Transition—as close as possible to the status quo, and agreed as soon as possible. Talent—a migration system which makes Global Britain a welcoming place to work and study—and provides complete reassurance for EU citizens already here. And on trade we are calling for a bespoke UK-EU agreement, providing mutual market access in financial services.
While the Commission’s stance is that financial services cannot be included in any trade deal, our approach is backed by industry, has the interest of government and is being discussed in member states across the EU27. We cannot find ourselves paying for the privilege of access or being a rule taker, and it is also certain that fragmentation of European financial services would not help future growth prospects. I am sure a lot of proposals will come up as we go through the negotiations and this will be a drawn out process.
Looking beyond Brexit, it’s vital that we continue to make the most of the opportunities around the globe, from the likes of the United States, Canada, the rapidly growing Asian markets and our Commonwealth partners. Building on our existing trade and investment relationships with these markers is integral for continued sustainable economic growth.
The City of London will remain a leading financial centre. This is due to strengths such as our time zone, language, legal system, technological innovation, financial infrastructure, regulatory framework and ability to attract international talent. But we can only thrive by working together, focussing on the right result for the City and securing the most successful future for us all.
Brexit Britain: the future of industry is a publication which examines the future of UK manufacturing through the prism of the recently released Industrial Strategy White Paper. The report features contributions from the likes of Greg Clark MP, Miriam Gonzalez, Richard Graham MP and Frances O’Grady.
If you want to know all about where industry is headed in Brexit Britain, you can download the whole Brexit Britain: The future of industry reportas a fully designed PDF document. To do so, simply enter your email below. You’ll receive your copy completely free—within minutes. [prosform fields="email,forename,surname" signupcode="Industry" countrycode="GB" redirect="other/the-future-of-industry-is-yours"]
When you sign up for this free report, you will also join our free Prospect newsletter.
Prospect takes your privacy seriously. We promise never to rent or sell your e-mail address to any third party. You can unsubscribe from the Prospect newsletter at any time.
