LONDON (Reuters) – Britain must negotiate a staggered departure from the European Union in the next few months or risk seeing thousands of finance jobs move overseas, the policy chief of London’s financial district told Reuters.
The City of London, home to global foreign exchange, bonds and fund management operations and to more banks than any other financial centre, faces upheaval as firms decide whether to shift jobs to continental Europe to keep serving customers there after Britain leaves the EU in 2019.
Catherine McGuinness, in practice the political leader of the historic financial district’s municipal body, says Britain and the EU must agree the outlines of any transition before the end of the year or it will be too late.
Britain and the EU began a first round of Brexit negotiations on Monday.
McGuinness, a financial lawyer and finance industry veteran who is in regular contact with the government over policy issues, said some firms in the sector have started relocating parts of their businesses overseas amid frustration at the lack of clarity about what any Brexit deal may look like.
“People need to know now,” McGuinness said in an interview, adding firms may move up to 15,000 finance jobs without any deal. “Decisions are already being made.”
“We need a clear pledge from both sides of a transition period so that there is clarity for business,” she said. “We need this as soon as possible, ideally by the end of the year.”
For Britain, a lot is at stake.
Financial services account for over a tenth of British economic output, and the industry contributed a record 71.4 billion pounds in corporate and employee taxes to the government last year.
A spokesman for Prime Minister Theresa May said on Monday the government wanted what he called an implementation phase, but the details of any deal would be subject to negotiations.
Finance minister Philip Hammond called on Sunday for a transition of a “couple of years” and said senior government ministers were becoming more convinced of the need for such a deal.
But McGuinness said there was confusion about what industries would be covered, how long it would last and any discussions on such a deal might come late in the divorce process.
Executives are pessimistic about Britain getting a deal this year – if at all – because they say it must first agree exit terms, notably the rights of expatriate citizens and any money it owes the EU.
McGuinness also urged Britain to take a more conciliatory approach after Foreign Secretary Boris Johnson said Brussels could “go whistle” if they expected Britain to pay a divorce bill for leaving the bloc.
“We need to remember that we are the ones walking out the room,” she said.
editing by John Stonestreet