Brexit will 'stall' City, says Goldman Sachs chief

The chief executive of Goldman Sachs has warned that London’s financial centre will “stall” due to the turmoil of the Brexit process.

Lloyd Blankfein, who runs the world’s second largest investment bank, said that a three-decade expansion that has turned London’s financial services sector into a world leader could grind to a halt.

“It will stall, it might backtrack a bit, it just depends on a lot of things about which we are uncertain and I know there isn’t certainty at the moment,” said Blankfein, in an interview with the BBC. “I don’t think it will totally reverse.”

Blankfein also warned that there would need to be an implementation period of at least a “couple of years” after the Brexit deal has been agreed in early 2019 in order to allow companies to adjust.

“We are talking about the long-term stability of huge economies with hundreds of millions of people and livelihoods at stake and huge gross domestic product,” he said. “So, if it takes a little while – I’d rather get it right than do things quickly.”

If not enough time was factored in then banks like Goldman Sachs would have to act “prematurely” and possibly move some of its operations and jobs.

In March, it emerged that Goldman Sachs had started to move hundreds of staff out of London ahead of a Brexit deal being struck as part of “contingency plans”. The bank employs more than 6,000 people in the UK.

On Friday Blankfein said he hoped not to trigger a large-scale move out of the UK. “We don’t have big plans now, we are looking – we are trying to avoid,” he said.

However, he added that the firm has held discussions with a number of cities across Europe, understood to include Germany’s financial centre of Frankfurt and Dublin, as part of post-Brexit contingency plans.

“Obviously, a lot of people elect to have their European business concentrated in a single place, and the easiest place, certainly, for the biggest economy in the world [America] to concentrate would be the UK – the culture, the language, the special relationship, and we are an example of that,” he said.

“If you cannot benefit from access to the EU from the UK – and nobody knows what those rules and determinations will be – then the risk is there will be some adjustment that will cause some people to have a smaller footprint in the UK.”

In March Richard Gnodde, the chief executive of Goldman Sachs International, said the bank was to take extra office space in Frankfurt and Paris.

He said that over the next 18 months there was a plan to upgrade its facilities in several cities on the continent.

“We’ll be taking extra space in a number of them and be increasing our headcount and infrastructure around those facilities,” he said. “What our eventual footprint will look like will depend on the outcome of [the Brexit] negotiations and what we are obliged to do because of them.”

Goldman has about 200 staff in Frankfurt and 100 in Paris.

In January, the bank was the subject of speculation it could shift half of its 6,000-strong workforce out of London, with 1,000 of the jobs relocated to Frankfurt.

Powered by article was written by Mark Sweney, for on Friday 5th May 2017 08.01 Europe/ © Guardian News and Media Limited 2010


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