LONDON (Alliance News) - The UK's powerhouse financial sector would face heightened risk and an exodus of well over 10,000 jobs without certainty over Britain's Brexit deal, members of Parliament were told Tuesday.
Xavier Rolet, chief executive of the London Stock Exchange, said his customers "simply would not wait" and would move operations if the LSE did not have a clear path for continuing its global operation.
Speaking to MPs on the Treasury Select Committee, Rolet said there was no doubt over the scale of the economic impact on jobs within the financial services sector.
"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."
His comments came as Douglas Flint, group chairman of HSBC, said the bank would take "pre-emptive action" to move jobs to France, the Netherlands or Ireland before the Article 50 process is complete.
He said the lender's heavyweight clients expected financial industry to adjust to meet their needs post-Brexit, but warned smaller firms were more likely to suffer under the weight of uncertainty.
Banks have issued stark warnings since the Brexit vote, 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.
US banking giant JP Morgan said 4,000 jobs would go, Goldman Sachs threatened to move 2,000 roles if Britain loses passporting rights and HSBC claimed it would transfer 1,000 positions from London to Paris following the Brexit vote.
However, the resilience of the UK economy since the EU referendum result has cast doubt over doom-laden economic reports suggesting Britain would suffer a sharp slowdown.
Andy Haldane, the Bank of England's chief economist, admitted last week that economists had become embroiled in a forecasting crisis, labelling warnings of a swift and deep downturn after the Brexit vote as a ''Michael Fish moment''.
Asked whether or not bank bosses had their hands "poised quivering over the relocate button" as previously suggested by the chief executive of the British Bankers' Association, Anthony Browne, Flint said it depended on what access lenders already had to Europe.
"I think the 'quivering over the relocate button' is dependent on business model and what you use the UK for," Flint said.
"If you are a fund institution hubbing in the EU from London, you really have no choice but to think very quickly and carefully about how you replicate the access to the EU when the UK leaves the European Union.
"If you have already established an operation in the EU you can take your time to decide whether or not to move quickly more leisurely, seeing how the negotiations flow.
"But 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."
The committee hearing comes after a House of Lords report warned last month that any pain caused to the financial sector during Brexit negotiations would harm the UK and Europe because key services were more likely to shift to New York, including euro clearing operations.
Speaking to MPs, Rolet said the EU was already singling out the UK to disrupt its euro-clearing operation in a way that does not effect other countries, including the United States or Japan.
He said the EU could take the "momentous decision" to claim the euro-clearing business via treaty or regulatory changes, or through the introduction of minor rules that have a far-reaching impact.
However, he reaffirmed his view that New York's financial industry was more likely to benefit if the euro-clearing business was shifted out of London.
"I think it is to 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, wine and cheese-based industries or start ups, fintech, but focused on clearing as he thought of the business to claim back.
"This is a strategic business," he added.
Flint warned that fragmenting London's unique financial ecosystem created uncertainty because no-one knows whether removing an operation would cause significant damage.
"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.
Focusing on a possible transition deal for the financial services sector, Rolet said the holy grail was to find a way to "maintain, nurture and promote" what has made the UK economy one of the best global performers, while preserving a strong trading relationship with the EU.
"I think there is a way to turn this process into a positive for both economies, but it is really essential ... that we find a way to buy ourselves a period of time of stability of grandfathering that needs to extend into several years - two years is just too short - so we can maintain those benefits."
Flint said he believes that a two- to three-year grandfathering period after Article 50 is triggered is necessary.
By Ben Woods, Press Association Chief City Correspondent
source: Press Association
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