Large banks are getting ready to relocate out of the UK early next year over fears around Brexit, the British Bankers’ Association (BBA) has warned.
Writing in The Observer, its boss Anthony Browne also says smaller banks could move operations overseas by 2017.
“Their hands are quivering over the relocate button,” he wrote. Most banks had backed the UK remaining in the EU.
Mr Browne also said the current “public and political debate at the moment is taking us in the wrong direction.”
His comments build upon those he made at the BBA annual conference last week, when he said banks had already “set up project teams to work out what operations they need to move by when, and how best to do it”.
“Banking is probably more affected by Brexit than any other sector of the economy, both in the degree of impact and the scale of the implications,” he told the newspaper.
“It is the UK’s biggest export industry by far and is more internationally mobile than most. But it also gets its rules and legal rights to serve its customers cross-border from the EU.”
Mr Browne added: “For banks, Brexit does not simply mean additional tariffs being imposed on trade – as is likely to be the case with other sectors. It is about whether banks have the legal right to provide services.”
Banks want to see the continuation of the EU’s “passporting” system, allowing UK-based financial services to operate across Europe without needing separate authorisation.
‘Split in two’
Banks have called for transition arrangements to be put in place after the UK leaves the EU.
But Mr Browne warned that in Europe and among UK eurosceptics the mood was “hardening”.
“The problem comes – as seems increasingly likely, judging by the rhetoric – when national governments try to use the EU exit negotiations to build walls across the Channel to split Europe’s integrated financial market in two, in order to force jobs from London,” Mr Browne said.
“From a European perspective, this would be cutting off its nose to spite its face. It might lead to a few jobs moving to Paris or Frankfurt but it will make it more expensive for companies in France and Germany to raise money for investment, slowing the wider economy.”
Meanwhile, Liberal Democrat foreign affairs spokesperson Tom Brake said that if the UK pursued a “hard Brexit” then it would “threaten the £65bn the UK financial services industry pays in taxes each year”.
He added: “The Conservative government must explain how it will make up this funding shortfall if the UK leaves the single market.”