Bank of England: 10,000 financial job losses on Brexit Day 1

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New Delhi | Published: November 1, 2017 5:32:22 PM

The Bank of England warned Wednesday that 10,000 jobs could be lost in Britain's financial industry on the first day after the country leaves the European Union

Bank of England, UK, Britain, european unionMany firms in the financial sector are worried about the implications of Britain’s exit from the European Union. (Reuters)

The Bank of England warned Wednesday that 10,000 jobs could be lost in Britain’s financial industry on the first day after the country leaves the European Union and urged the government to swiftly reach a transition deal with the bloc.

Sam Woods, the central bank’s deputy governor for prudential regulation, told a parliamentary hearing that he expected 10,000 job losses on “day one” of Brexit.

That, he said, would represent around 2 percent of the British workforce in banking and insurance, or around 3 percent of those working in or around London.

Many firms in the financial sector are worried about the implications of Britain’s exit from the European Union, which is due in March 2019. Membership of the EU has given firms the ability to automatically sell their products across EU borders and London has become the European hub for many international firms.

Lloyd Blankfein, the CEO of U.S. bank Goldman Sachs, has been vocal in warning that his firm may relocate chunks of his business out of London to Germany’s financial center in Frankfurt. Other firms are already making contingency plans to set up operations in Europe to avoid a potential disorderly Brexit, which would involve Britain not coming to an agreement with the EU on matters of trade.

The Bank of England has voiced concerns that many will start implementing those contingency plans early next year and has urged the government to agree on a transition deal with the EU to extend current economic and trade relations for at least a couple years after Brexit.

Woods told lawmakers that to be helpful for companies, a transition deal would have to be agreed sooner rather than later, as it is a “wasting asset.”

Woods also said that a recent study from consulting firm Oliver Wyman that 65,000 to 75,000 jobs could be lost in the longer-term in Britain’s financial services was within “the plausible range of scenarios.” He said that the actual number would depend on firms retaining automatic rights to operate in the rest of the EU and whether Britain agrees on a transition deal.

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