05 Apr 2017

Thousands of Jobs in London City Under Threat after Brexit

Theresa May is stepping back on immigration, Farage is accusing the EU of being “gangsters”

Manfred Weber, the German head of European People’s Party (EPP), dropped the news like another hot potato. He said that all the euro-denominated businesses should move from London to EU cities like Amsterdam, Brussels, Paris or Frankfurt. The conservative leader and close ally of Angela Merkel is convinced that “the euro business should be managed on EU soil”. At a press conference he gave in Strasbourg, Weber pointed out that European cities have already been competing and are attracting London financial institutions, which are considering relocating, but refused to get more specific into which businesses he is referring to.

Weber is not a member of the EU’s negotiating team, however, his words confirm the intentions of the European leaders to not allow Britain to keep its financial benefits while blocking the migration of workers. Currently the members of the European Parliament are debating the draft of the guidelines which needs to have their majority approval before the next step in the negotiations is made.

London City is Packing

A report by the consulting and auditing company EY predicted last autumn that up to 83,000 jobs could be lost in the next few years, if euro-denominated companies leave London. That could create a domino effect which will impact up to 230,000 people across the UK, analysts conclude.

In a more recent research from Bloomberg, its specialists have foreseen JP Morgan, UBS, HSBC and Morgan Stanley to be among the financial giants which will soon start to consider potential new “office” places. Bloomberg is expecting the banks to relocate between 1000 to 4000 of their employees, to meet the demands of the EU market. According to the financial site hundreds of people, tired from months of waiting and leaving in the dark about their future, have already volunteered to be transferred back to their homes. Independent cases like this are reported from Citigroup Inc., Societe Generale SA and Goldman Sachs and soon they will become the trend, analysts concluded.

Only a week ago, another financial titan, Lloyd’s London, officially announced that, by 2019, it will relocate its entire European department in Brussels which means the relocation of 1000 work places in 5 years’ time.  However, it seems like Dublin could be the biggest winner if future transferring is needed. Ireland is one of the EU countries with the lowest corporate tax (12,5%) and it is close to London. According to some recruitment companies, the process has already started: Every time I’m with a group of Irish bankers, all the talk around the table is about when they’re going to move back home. If you think it’s inevitable that you’re going to be moved, and you have a pretty good sense of where to, then you’re better off getting in there early so you can get a decent house and get your children into a decent school,” John Purcell of Purcell & Company, a London-based executive recruitment firm said for Bloomberg.

Meanwhile in Strasbourg

Those prospects seem of no concern to Nigel Farage who spoke to the European parliament today during the debate. One of the senior MEP’s has annoyed the former Ukip leader by saying Britain will not enjoy “the same or better conditions” in its future relation with the EU. Nigel Farage then accused the EU27 of behaving like the “mafia” and holding Britain “as a hostage”. Mr Farage continued “It’s not us that will be hurt. We don’t have to buy German motorcars, we don’t have to buy French wine, we don’t have to eat Belgian chocolate.” He blamed the EU leaders of trying to put the interests of the Union above those of the citizens and the companies, warning them that if they continue to act the same way, there will be other Articles 50 to be triggered.

Mr Farage’s controversial performance is hardly a surprise, but unfortunately it’s casting a shadow over an earlier announcement from Theresa May that “Free movement of people from the EU to the UK could be extended after Brexit”. The Prime minister is currently on a visit in Jordan and Saudi Arabia, but Brexit questions keep chasing her.

Mrs May’s statement is a serious indication that the Government’s tone on one of the hottest topics – immigration has softened. The original conservative approach to the Brexit negotiations was criticised both at home and internationally. John McDonnell, Labour’s shadow chancellor said that, that was the main reason for the current job alarm. “This threat to 100,000 jobs was all too predictable” he stated, demanding the government to prepare a strategy to protect jobs. However, according to Theresa May, now is the time to wait: “Once we’ve got the deal, once we’ve agreed what the new relationship will be for the future, it will be necessary for there to be a period of time when businesses and governments are adjusting systems and so forth, depending on the nature of the deal – but a period of time when that deal will be implemented,” she said during her morning press conference.