John Glen, the UK government’s new City Minister, held talks with London-based bank chiefs in the latest effort to dissuade them from relocating thousands of jobs to new European hubs because of Brexit.

Government acts to slow relocations

The meeting came just a week after Prime Minister Theresa May and Chancellor of the Exchequer Philip Hammond had met bankers in Downing Street in a similar bid to convince them to keep the bulk of their operations in London.Banks and other financial institutions are worried that, after Brexit, they will lose the ‘passporting rights’ that currently enable their London-based operations to operate freely throughout the bloc.

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Post-Brexit European hubs

Many are in the throes of establishing new European hubs in the likes of Frankfurt, Dublin and Paris and are preparing to make final decisions on relocating from London in the coming weeks and months.Friday’s meeting was Mr Glen’s first with bankers since his appointment as City Minister in Mrs May’s recent, ministerial reshuffle, and came amid increasing unease in the financial services over the lack of clarity on their post-Brexit future.

Emmanuel Macron visit to the UK

President Emmanuel Macron of France has warned that even if a post-Brexit free trade agreement is agreed, it will not provide the full access to the single market for financial services that UK-based banks currently enjoy as EU members.At a summit meeting with Mrs May on Thursday, Mr Macron said, “I want to make sure that the single market is preserved because that is very much the heart of the EU.“The choice is on the British side, not on my side. But there can be no differentiated access for the financial services. If you want access to the single market – including the financial services – be my guest. But it means that you need to contribute to the budget and acknowledge European jurisdiction.”

Future economic relationship

Mrs May responded, “We recognise that as we leave the EU we will no longer be full members of the single market. We recognise that. There will be a different relationship in future, a different balance of rights and responsibilities, and we’ve been very clear about that.“But I believe that it is actually in the interest not only of the United Kingdom, but also the European Union as it goes forward, to continue to have a good economic relationship and partnership with the UK and I believe that should cover both goods and services.”One banker familiar with Friday’s talks said, “The clock is ticking (on relocation decisions). The problem is that the government can promise the earth but we’re in limbo because there is no clarity and we do not know what deal, if any, will eventually be struck.“That leaves banks in an impossible position, so we have to look at establishing new hubs now or face the prospect of being left high and dry come March next year.“Obviously, London will remain a global financial hub whatever happens. But the European market is expanding and will not be ignored. If new hubs are to be created and staff and offices moved, we will need a lead time of nine months or so to get them up and running before the Brexit date.”

Single market public opinion

The meeting came as a new opinion poll showed a majority of Britons now supported remaining in the single market and customs union after Brexit.The BMG Research poll, based on more than 1,500 interviews earlier in January, found 60 per cent of those expressing a view backed remaining in the single market with only 16 per cent opposed. On the customs union, 57 per cent wanted Britain to remain and only 16 per cent favoured leaving.After the meeting between Mr Glen and the banks, a Treasury spokesman said, “John Glen, the Economic Secretary to the Treasury, joined the chief financial officers of some of Europe's leading banks for a discussion on the opportunities and challenges posed by Brexit, and the government's vision for the future of the UK's financial sector.“The Economic Secretary updated the CFOs on the latest progress made in the Brexit negotiations, including the UK's aim to agree an implementation period as soon as possible, and invited them to share their insight.“He also invited the CFOs to look beyond the UK's exit from the European Union, reiterating the UK's leading position in the markets of the future, such as Green Finance and FinTech.”

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Read more about the future of the UK business in the Winter issue of our magazine 

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