NEWS | The Big Stories
Financial sector could lose
232,000 jobs over Brexit
uncertainty, warns LSE chief
X
avier Rolet, chief executive of the
London Stock Exchange Group
(LSE), has warned that London’s
financial sector faces losing 232,000 jobs
without certainty over Britain’s Brexit deal.
Speaking to MPs on the Treasury Select
Committee, Rolet said that a five-year
transitional Brexit deal was necessary to
protect the UK’s financial industry and
that the projected two years of Brexit
negotiation was too short. “What is
required to maintain stability is nothing
less than a grandfathering of the existing
conditions of trade, for a limited period of
time,” said Rolet.
Rolet warned that many tens of
thousands of jobs might move from the
UK to othe r places in the EU as firms,
especially foreign ones, currently based
in the UK will want to continue doing
business with the rest of Europe under
existing EU rules.
“Without a clear path to continued
operation of our global businesses
our customers simply would not wait,”
he said. “I’m not just talking about
the clearing jobs themselves which
number into the few thousands but the
very large array of ancillary functions,
whether it’s syndication, trading, treasury
management, middle office, back office,
risk management, software, which range
into far more than just a few thousand
or tens of thousands of jobs. They would
then start migrating.”
The figures come from a report
produced by professional services firm
EY for the LSE which, according to Rolet,
found that “as far as the entire United
Kingdom is concerned, 232,000 jobs
would be at risk or likely to be lost”.
Rolet warned that the EU was already
singling out the UK to disrupt its euro-
clearing operation in a way that does not
affect other countries, such as the United
States or Japan. “I think it is no surprise
that almost a few days after the outcome
of the referendum was known, one of
the leaders of the continental European
countries, out of the blue, claimed not
manufacturing, not agricultural products,
dofonline.co.uk
not wine and cheese-based industries,
start-ups or fintech, but focused on
clearing as he thought of the business to
claim back,” he said.
Rolet’s comments came on the same
day as Douglas Flint, group chairman
of HSBC, said the bank may take “pre-
emptive action” to move jobs to France,
the Netherlands or Ireland before the
Article 50 process is complete, but would
wait longer before “pushing the button”
on the move. Flint said the “ecosystem in
London is a bit like a Jenga tower – you
don’t know if you pull one small piece
out whether nothing will happen or it will
have a dramatic impact.”
He said: “If you have already
established an operation in the EU you
can take your time to decide whether or
not to move quickly or more leisurely,
seeing how the negotiations flow. But
with a bank like us with operations all
over the EU including a significant full-
service bank in France, you can take even
longer to decide when to push the button.
“Nobody wants to push the button
because the best outcome for everybody
is the preservation of the status quo
insofar as is possible.”
Other banks have also issued stark
warnings over Brexit, claiming thousands
of jobs would shift to rival financial
centres across Europe and the United
States if Britain loses the right to sell
financial services to the EU. JP Morgan
said 4,000 jobs would leave the UK and
Goldman Sachs threatened to move 2,000
Xavier Rolet, chief executive of the
London Stock Exchange group
roles if Britain loses passporting rights.
Following the hearing, Treasury
Committee chairman Andrew Tyrie said:
“The unanimity among these leading City
figures about the need for a three-year
`standstill` at the end of the Article 50
process is significant. They argued that
without such an arrangement, major banks
and other financial services firms will take
pre-emptive action at a cost - perhaps large
- to the sector and the wider economy.
“They also made other important points.
Preserving the access arrangements
provided currently by passporting is
an important objective. Accepting the
loss of one part of the financial services
industry, such as euro clearing, could have
unintended and disruptive consequences
for the UK and the EU.” Q
EU blocks stock exchange merger
The London Stock Exchange Group says it “regrets” the decision of EU regulators to
block its proposed £21bn merger with German stock exchange Deutsche Boerse. In a
statement, LSE Group said: “This proposed merger was an opportunity to create a world
leading market infrastructure group anchored in Europe, which would have supported
Europe’s 23m SMEs and the development of a deeper capital markets union.”
Margrethe Vestager, the EU competition regulator, said that the two parties had refused
to meet her requests to offset concerns about competition. “The European economy
depends on well-functioning financial market and the merger would have significantly
reduced competition by creating a de facto monopoly in the crucial area of clearing of
fixed income instruments. As the parties failed to offer the remedies required to address
our competition concerns, the commission has decided to prohibit the merger.” Q
DIRECTOR OF FINANCE
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