The Bank of England has warned that 10,000 jobs could leave the City on “day one” after the UK leaves the EU.
Sam Woods, a deputy governor of the Bank, also admitted that forecasts of 75,000 job losses over the long-term were “plausible” at an appearance before peers on the Lords EU financial affairs sub-committee.
Woods runs the regulatory arm of the Bank and has already asked 400 banks and financial firms for their contingency plans in the event of hard Brexit. He said some of those plans were being put in place – with banks reserving school places and hiring office space – but that this would get under way “in earnest” in the first quarter of the year.
The estimate of 75,000 job losses was made by consultants Oliver Wyman, which also warned that up to £10bn in tax revenue could be lost if the UK was left to rely on World Trade Organisation rules and there was no transition period after March 2019 when the country leaves the EU.
Woods said this was not an estimate by the Bank of England but was within a plausible range of job losses that would happen in the long term if the UK leaves the EU without a trade deal.
He said the actual number was a “moving feast” and that the initial impact of about 10,000 roles amounted to 2% of the total employed in financial services.
Woods has previously called on the government to agree a transition deal by Christmas to give firms more certainty about Brexit and reduce risks to the financial system that may arise as firms adjust their business models to continue to be able to access the remaining 27 EU countries.
He told peers this was also important as the Bank of England had to make arrangements for EU banks and other financial services firms which it needed to authorise to allow them to continue operating in the UK after Brexit.
“We will need to get going,” Woods said, warning that the changes being made would increase complexity for firms.
He was speaking the day after Andrew Bailey, the chief executive of the Financial Conduct Authority, told MPs that banks could start to make irreversible moves to transfer staff from London to rival cities in the EU unless there is clarity over Brexit by the end of the year.
Goldman Sachs has begun to implement contingency plans by taking the top eight floors of a 37-storey block under construction in Frankfurt, even though it is building a new European headquarters in London.
This article was written by Jill Treanor, for theguardian.com on Wednesday 1st November 2017 11.34 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010