The British financial services lobby group TheCityUK has warned that the value of any post-Brexit transitional deal that might be agreed between the UK and the EU is lessening by the day, putting at risk up to 75,000 UK jobs in the sector and £10 billion (€11.2 billion) of annual tax revenue.
TheCityUK added that any binding deal, which looks increasingly unlikely to be agreed before the first quarter of next year, could come too late to stop more financial institutions in London deciding to relocate staff to rival financial centres in the EU.
Last week the consultancy firm EY said that financial service firms have so far committed to transferring 1,500 members of staff from the UK to the remaining 27 EU member states – with the cities of Dublin, Frankfurt and Luxembourg being the most popular choices.
TheCityUK says that, without a two-year transitional agreement from March 2019, firms will start to accelerate their contingency plans.
Miles Celic, TheCityUK’s chief executive, said: “EU and UK negotiators cannot delay discussing a transitional deal any longer if they want it to hold any real value.
“Firms are beyond the planning stage now. If they haven’t done so already, most will be ready to press go on their contingency plans in the New Year.
“They can still take their foot off the accelerator if a transitional deal is agreed, but without progress soon, it may be too late.”
Once businesses start moving, there is “no reverse gear”, he said, as “it is simply not efficient or economically viable to move operations twice.”
Celic’s warning follows similar comments earlier this month from the deputy governor of the Bank of England Sam Woods who said that, without an agreement in place by Christmas “diminishing marginal returns will kick in” and that “firms would start discounting the likelihood of a transition in the central case of their planning”.
EU leaders will meet later this week with the expectation that guidelines on a possible transitional arrangement won’t be adopted until December.
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