Bank of England sees up to 75,000 finance job losses after Brexit

Wednesday, 1 November 2017 00:00 - - {{hitsCtrl.values.hits}}

London (Reuters): The Bank of England expects Britain to lose up to 75,000 financial services jobs in the years after its departure from the European Union in 2019, the BBC reported on Tuesday.

London dominates global currency trading and is Europe’s main finance hub. Overall the sector employs more than a million people across Britain and official data on Tuesday showed it generated a record 61 billion pounds ($ 81 billion) of exports last year.

But once Britain leaves the EU, it is likely to be harder to sell services across Europe and some banks have already started to move staff from Britain or expand operations elsewhere.

The BBC said the BoE - which is reviewing banks’ contingency plans - thought as many as 75,000 jobs would be affected.

“I understand that senior figures at the Bank are using the number as a ‘reasonable scenario’, particularly if there is no specific UK-EU financial services deal,” the BBC’s Economics Editor Kamal Ahmed wrote.

The BoE declined to comment on the BBC report.

BoE Deputy Governor Sam Woods told Reuters at the start of the month that a figure of 10,000 job losses in a Reuters survey of banks’ plans was a reasonable estimate of the initial impact of leaving the EU.

The longer-term impact of Brexit on jobs in financial services was much less certain and depended on what deal Britain was able to reach with the EU, Woods said.

But he added that he expected London would continue to be one of the world’s largest financial centres in the coming decades, after some politicians and economists predicted the City would lose its pre-eminent status as a global hub for finance.

The 75,000 figure in the BBC report is in line with a forecast from management consultants Oliver Wyman of what might happen if Britain and the EU fail to reach a deal on financial services.

“It is vital that the EU and the UK avoid such a ‘no deal scenario’. This outcome will see few winners, with UK and EU customers likely to bear the brunt in the form of reduced choice and cost increases,” said Miles Celic, chief executive of TheCityUK, the industry group that commissioned Oliver Wyman.

Bruegel research group in February to as many as 232,000 by London Stock Exchange chief executive Xavier Rolet in January.

Woods and his fellow BoE deputy governor, Jon Cunliffe, are due to speak to a British parliament committee on Wednesday about the effect of Brexit on financial services.

Some firms have started to move staff out of London, while others are waiting until early 2018 to see if Britain and the EU agree transitional arrangements to smooth Brexit.

Andrew Bailey, chief executive of Britain’s Financial Conduct Authority, told lawmakers on Tuesday that firms would take “irreversible” decisions if there were no deal soon.

“The end of this year, beginning of next year is the point at which these things start happening,” he said.