A leading City figure whose former role involved governing the Square Mile has said Brexit could result in the loss of 75,000 jobs and up to £10bn in annual tax revenue.
Sir Mark Boleat, who was chairman of the City of London Corporation until last year, said a seepage of jobs from the capital was already underway and that the political rows over a deal or no-deal outcome was now “irrelevant” to City chief executives.
Banks including JP Morgan, Lloyds, Barclays, HSBC and Goldman Sachs have already established subsidiaries in other EU countries, or moved part of their business because EU law requires them to be legally compliant from the day the UK leaves.
“It is no longer contingency planning. If you are running a bank it is non-negotiable. The regulators won’t allow it,” he said.
In an interview with Advisory Excellence before a keynote speech on Wednesday at the Cass Business School in London, Boleat said the City would not die as the financial capital of Europe but would be damaged by Brexit.
“These moves are bad for London, but they are also bad for the EU because they will make financial markets less efficient,” he said. “Financial services will be fine, but I would say if the City has 80% of international business now, in future it will have maybe 60%.”
Boleat said Brexit has prompted expensive and unwelcome processes and the damage would be seen over the decade to come.
“This is a 10-year operation. In the short term it won’t be noticeable in terms of staff. Banks won’t be putting out press releases saying they are moving some of their operations because of Brexit because they don’t want the publicity. They are just getting on with it.
“Moving costs millions. Banks have had teams of 100 working on Brexit. It is an expensive process. You have to identify which city to go to, applying for a [banking] licence costs millions, then you have to find the IT staff, find accommodation.”
He also believes the government is in such disarray that the Brexit deal will be pushed back to December, leaving business planning elsewhere perilously close to exiting the EU.
In his address, Boleat will say he does not think financial services will get a special passporting deal to allow them to continue pan-European services from London and that banks are already past that moment of truth, whatever politicians think.
“Those who suggested that some business would move were accused of scaremongering,” he will say before listing 15 major banks and financial services who have already set up on the continent or Dublin.
He will quote a report by the Oliver Wyman consultancy that says if the UK strikes a deal giving full market access, the impact on the City would be modest, the equivalent of 3,000-4,000 jobs and a loss of £500m in tax a year to the Exchequer.
“At the other end of the spectrum if the UK had no special status with the EU, now the most likely option, the industry would lost £18bn a year in revenue which would put 31,000 to 35,000 jobs at risk along with £3.5bn to £5bn in tax revenue.”
Add the knock-on effect for related industries and the loss of entire business units, there is an estimated further losses of £14bn to £18bn in revenue and 34,000 to 40,000 jobs and £5bn in tax.
Asked whether the government was aware of the daily bleed of financial services to the rest of the EU, Boleat said: “Not enough, that’s the worry. It needs business to talk to MPs, not to give their view on Brexit, but to explain to them ‘this is what I am having to do because of Brexit’. This is not scaremongering, this is reality.”