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By Huw Jones
LONDON, June 30 (Reuters) - Britain's markets watchdog hascalled on banks to assess how different trading relations withthe European Union would hit the City of London's role as aglobal financial centre.
Financial services account for 12 percent of Britain'seconomy, employ over 2.2 million people, and pay 66 billionpounds ($88.50 billion) in taxes.
Companies in the sector rely on a "passport" to offerservices across the 28-nation bloc, but with Britain voting lastweek to withdraw from the EU, they may not have full passportingrights in future.
Britain won't begin formal exit negotiations with Brusselsfor months and any agreement on new trade relations could takeyears to finalise.
John Griffith-Jones, chairman of the Financial ConductAuthority, said banks and other financial sector firms must resist the "chicken and egg" syndrome of waiting to see whattrading terms emerge before assessing risks to the UK sector.
"I suggest there is a need for an industry led 'collective'strategy view to emerge," Griffith-Jones told lobby groupTheCityUK's annual conference.
The industry must be ready to tell the government whatvarious degrees of access to the EU single market would mean forLondon in terms of costs and market share, he said.
"It is important for the UK that, at the appropriate moment,you are able to inform the government where your majoropportunities and risks lie, along with other industries, as itforms its plans for the negotiation of our exit," he said.
John McFarlane, chairman of TheCityUK and of Barclays bank, told reporters at the conference that "things arenot going to stay the same" for London's financial centre.
"We are going to end up with less. How much less is afunction of the negotiations," McFarlane said.
Access to the EU's single market was the top priority, butlittle would happen until there was clarity on trading terms inabout two years' time, he said.
Firms won't rush to break costly property leases until theyhave seen what sort of trading terms emerge. But firms without abase elsewhere in the EU would need a contingency plan "in theirback pocket" in case Britain does not get the trading terms itwants, he added. ($1 = 0.7458 pounds) (Reporting by Huw Jones; Editing by Keith Weir)
