100,000 financial jobs on the line stir up the ‘Brexit’ debate further

Rick Steves

The discussion over ‘Brexit’ continues as the referendum where the people will decide whether the United Kingdom will remain in the European Union or not is due in June 23. From within the financial sector, opinions diverge. The British Bankers Association said that “businesses don’t like that kind of uncertainty” and the RBS warned of […]

Banks not liking the uncertainty

The discussion over ‘Brexit’ continues as the referendum where the people will decide whether the United Kingdom will remain in the European Union or not is due in June 23. From within the financial sector, opinions diverge.

The British Bankers Association said that “businesses don’t like that kind of uncertainty” and the RBS warned of potential damage to the economy, while the City could see HSBC, JP Morgan and Deutsche Bank changing domicile.

In a bid of caution, Credit Suisse prohibited its executives from talking about ‘Brexit’, while TheCityUK’s CEO Chris Cummings took the opposite direction and said “it is obvious that if Britain was outside the EU, we would be as reliant on the third-country rules as Bolivia”.

On the other hand, former Bundesbank’s President Axel Weber said he doesn’t expect a major blow to London’s financial hub status, CMC Founder and CEO Peter Cruddas donated £1 million to campaign for Britain to leave the EU, and Hargreaves Lansdown Founder Peter Hargreaves cited Singapore as a similar case: “When Singapore became independent from Malaysia, that little insecurity that they were no longer part of Malaysia, it was an inspiration. I honestly think that would be good for us too.”

Today, a research study commissioned by TheCityUK, whose CEO compared the UK to Bolivia, and carried out by PricewaterhouseCoopers (PwC) found that indeed there are up to 100,000 financial sector jobs risking to disappear by 2020, with the sector losing steam by £12 billion. The potential recovery in 2030 would still show a weaker industry than today’s, with less value and 30,000 fewer jobs.

The period of uncertainty in case of a majority of the “yes” vote would cause rethinking of investment strategies and rocketing financing costs. TheCityUK CEO Chris Cummings said: “While Brexit may not be ruinous for the UK economy, it does risk damaging the UK-based financial services sector, particularly over the short-term, delaying investment decisions and reducing activity. It also threatens the overall competitiveness of the UK as a place to do business.”

Andrew Sentance, senior economic adviser at PwC, had a bleak answer to the ‘Brexit’ debate: “In all the scenarios we have examined, the financial services industries will be less successful for at least a decade if the UK leaves the EU.”

Despite this report and many others alike, both sides of the referendum are expected to keep the discussion going until June 23.

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