The City of London has warned that the loss of banking jobs to EU countries due to Brexit could threaten British and European financial stability.
Interviews with more than half a dozen senior bankers and business leaders reveal growing certainty that the threat of losing single market access will force a wave of relocations this year and may cause an “unwinding” of a cluster of related businesses.
While the immediate loss of a few thousand jobs is viewed with relative equanimity, concern is mounting over the knock-on effect on financial stability if the City’s valuable related professions begin to fragment.
Douglas Flint, the chairman of HSBC, Britain’s biggest bank, said common regulation needed to be agreed with the remaining 27 EU members once Brexit talks got under way or there was a risk of sparking turbulence in the financial system.
“One of the critical pieces is the ecosystem that exists, which effectively connects the fund managers to the risk managers to the liquidity providers to the insurance providers and the credit providers … it all benefits from all the other pieces being there,” Flint said.
“That gets built up over decades as bits get added to the existing cluster. It’s difficult to know which is the piece that causes people to say, ‘Well, if that’s not there I have to do something else,’ and you get an unwinding of a cluster because things that are connected today are more important than people imagine.”