BoE ‘believes 75,000 city jobs could relocate’
Concerns continue to grow over the potential number of jobs that could be relocated out of the UK as a result of Brexit. The BoE has produced one of the largest potential job loss estimates for London.
31 October 2017
The Bank of England has estimated that, in a worst-case scenario, 75,000 jobs in financial services could relocate after Brexit, according to a BBC report on Tuesday.The estimate, which is in line with several previous forecasts, is based on the assumption that Britain and the EU fail to reach a deal that would enable UK-based banks to continue trading throughout Europe after leaving the bloc.
Related stories:
Access hundreds of global services and suppliers in our Online Directory
Bank relocations from London could move globally
Most UK-based banks have contingency plans to move staff from London to new, post-Brexit hubs such as Frankfurt, Dublin, Paris and Luxembourg, although some analysts believe the big winners of any move to undermine the City as a global financial hub could be the likes of New York and Singapore.The Bank of England’s estimate of the number likely to relocate has echoes in a study earlier this year by the think-tank Centre for London and a report in 2016 from management consultancy Oliver Wyman, which suggested that up to 40,000 jobs could be lost directly from financial services, with a further 30-40,000 going in associated activities such as legal and professional services. However, other predictions have come to vastly different conclusions. A poll of City finance firms by Reuters suggested an initial relocation figure of almost 10,000 following Brexit; an analysis by Bruegel, a Brussels think-tank concluded that 30,000 London jobs could relocate or could simply disappear; and in January, the chief executive of the London Stock Exchange, Xavier Rolet, warned that 200,000-plus jobs in the capital could be lost if the government failed to provide a clear plan for post-Brexit operations.The widely-differing estimates reflect continually-changing plans by banks themselves. JP Morgan originally said it might move 4,000 jobs from Britain but has now reduced the figure to around 1,000, while UBS said last week it might move only 250 London jobs after initially planning to relocate as many as 1,000. Even HSBC, which has consistently spoken since the EU referendum of moving 1,000 jobs to Paris, suggested this week that the total might be lower.Post-Brexit trading relationship with EU to influence numbers
In his report, Kamal Ahmed, the BBC’s economics editor, said, “I understand senior figures at the Bank are using the (75,000) number as a ‘reasonable scenario’, particularly if there is no specific UK-EU financial services deal.“The number could change depending on the UK’s post-Brexit trading relationship with the EU. But the bank still expects substantial job losses.“The Bank of England has asked banks and other financial institutions, such as hedge funds, to provide it with contingency plans in the event of Britain trading with the EU under World Trade Organization rules – what some have described as a ‘hard Brexit’.“That would mean banks based in the UK losing special passporting rights to operate across the EU. The EU could also impose other ‘locations specific’ regulations such as where trading in trillions of pounds worth of euro-denominated financial insurance products has to be based. That could mean trading jobs moving to Paris or Frankfurt.”Related stories:
- UBS revising plans for mass relocation from London
- City joins calls for ‘urgent’ Brexit transition deal
- German regulator tells banks: ‘speed up relocation plans’
London expected to remain financial centre of Europe
Mr Ahmad said that even if 75,000 jobs were to go, London would still be by far the largest financial centre in Europe with more than a million people employed in financial services.He added, “Many also believe there will be a positive outcome to the EU negotiations as the City supports many governments and businesses on the continent in raising funds and executing global deals. Those companies and firms would want to keep a close relationship with the UK and its well-developed global markets capacity.”Earlier in October, Sam Woods, deputy governor of the Bank of England, warned that unless the UK and the EU agreed on a Brexit transition deal by Christmas, banks would begin triggering their relocation contingency plans.In a speech in London, he said, “If we get to Christmas and the negotiations have not reached any agreement on this topic, diminishing marginal returns will kick in.“Contingency planning is a sliding scale of increased commitment, investment and momentum through time. It is much more prudent and prosaic than hovering over the relocate button or rushing to the exit door.”For related news and features, visit our Brexit section.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory ©2024 Re:locate magazine, published by Profile Locations, Spray Hill, Hastings Road, Lamberhurst, Kent TN3 8JB. All rights reserved. This publication (or any part thereof) may not be reproduced in any form without the prior written permission of Profile Locations. Profile Locations accepts no liability for the accuracy of the contents or any opinions expressed herein.
