Banks could start making decisions to move assets out of the UK as early as the end of 2017 if there is no deal in place to maintain their rights to sell services freely across the European Union, a leading thinktank has warned.
Open Europe, which took a neutral stance on the referendum, said Britain could risk losing its status as a hub for financial services unless passporting rights are made the top priority in negotiations with the EU. The warning came as the Financial Times reported that the government is considering proposals [paywall] that would see billions of pounds paid into the EU budget in exchange for giving the financial sector continued access to the single market.
The report’s authors also warned that failure to help UK-based banks could have repercussions on the continent, because banks would not necessarily move their business from Britain to mainland Europe, and could opt for New York or Singapore.
The thinktank, whose co-director Raoul Ruparel recently joined David Davis’s Brexit advisory team, said the government should aim to offer the industry maximum certainty as early on as possible.
“Based on our background conversations, if banks, for instance, were still unclear about what the future holds one year before the UK formally exits the EU, they would be forced to start making decisions – including over whether to shift part of their business elsewhere,” the report said. “Some firms may well start implementing their contingency plans even earlier than that.”