Plans to move some of Britain’s finance industry out of the UK will reach “a point of no return” in the first three months of next year if there is no clear agreement with the European Union.
That is the view of the boss of UK Finance, the group that represents the country’s financial sector – responsible for employing more than 2 million people.
Stephen Jones told Sky News that international finance companies based in the UK had already done “a lot of planning” into how they would react to a range of scenarios, notably a so-called “hard Brexit”, which he defined as being a departure “with no soft landing and no adaptations”.
Mr Jones said those contingency plans were now at the point where they would move from theory to reality.
“They are not irreversible, but inevitably, if you have, for instance, bought a building in Frankfurt, got a licence and hired people then you’re going to do something with that – but you might end up doing less if there’s a good deal for the UK,” he said.
“A lot of planning has gone into planning for what the financial services industry would consider to be the worst case scenario – that’s planning around premises in other countries, getting licences, finding schools and housing – all so you can be up and running in March 2019.
“As we get to the first quarter of 2018, executing on those plans becomes irreversible in my opinion. We reach the point of no return.”
The City of London has seen plenty of changes over the centuries, changes that have bred resilience and allowed it to balance tradition and modernity.
It is a blend encapsulated in the Lloyd’s Building – a bold statement of modern architecture housing an insurance market that’s 330 years old. But a market that’s now facing the challenges of Brexit.
Lloyd’s, like every other major financial company in Britain, has had to come up with a contingency plan to ensure that Brexit doesn’t disrupt service.
Its response – a plan to set up a subsidiary in Brussels.
“We’re now implementing those plans and the key thing for us next year is to get the subsidiary up and running,” said Inga Beale, chief executive of Lloyd’s.
“We are being very cautious, so we might be moving sooner than other players. But in business, anyone who hasn’t put in place their contingency plans – well, if there’s a hard Brexit then woe betide them. We’ve got to get moving on this, and we’ve got to be ready for the worst.”
Much will depend on next week’s European summit in Brussels.
It will gauge whether sufficient progress has been made on Brexit to talks to allow negotiations to switch to trade.
Many British businesses are hoping vehemently that those talks do start – there is a tangible desire for clarity about what Brexit could mean, but not a matching level of confidence.
“We would love to have more concrete words, commitments and promises coming out,” Ms Beale told Sky News.
“I just don’t know whether we will have moved forward by the end of next week, I really don’t.”
(c) Sky News 2017: Brexit: British finance firms heading to ‘point of no return’