Call for Brexit 'bridge' to stop financial services exodus
The sector employs more than a million people in the UK and could be threatened by a "cliff edge" Brexit, according to a report.
Thursday 15 December 2016 08:47, UK
Britain's financial services sector must be offered a transitional Brexit arrangement to prevent companies from moving operations to rival centres, peers have warned.
A report by the Lords EU Financial Affairs Sub-Committee said there should be a "bridge" to avoid a "cliff edge" break with the European Union.
It cited the possibility of business being lost from London - the world's leading financial services centre - to the likes of Paris or Frankfurt, or even deserting Europe altogether in favour of New York.
The cross-party group of peers was also critical of what it described as the "sporadic" engagement by the Government with the financial services industry, which employs 1.1 million people.
Baroness Falkner of Margravine, chair of the committee, said: "The Government has a lot of work to do.
"First of all it must, early in the negotiation process, agree a transitional period so as to prevent UK financial services firms from restructuring or relocating on the basis of a 'worst-case' scenario.
"Companies may decide that uncertainty is too high a price to pay so they might as well move to Dublin, they might as well move to Frankfurt - that is our great concern.
"It was not a sense of panic, but our sense is that its terribly important for the Government to indicate early on what its negotiating priorities are. 'The bridge' has to be a negotiating priority."
The peers also called on ministers to determine as precisely as possible how much the financial sector currently relies on "passporting" with the EU.
This arrangement, which allows firms easier access to European markets, is feared to be under threat due to Brexit.
Baroness Falkner said alternatives to passporting were "patchy, unreliable and vulnerable to political interference" and that the Government should seek to bolster them.
The report comes amid questions about whether there might be a wider transitional Brexit deal.
Brexit Secretary David Davis
Chancellor Philip Hammond said earlier this week that businesses, regulators and "thoughtful" politicians recognised a transitional deal would be helpful in avoiding the shock of a sudden switch.