Prime Minister Theresa May has outlined her plans for Brexit but a major law firm has warned that if London pulls out of the European single market, there will be serious implications for the city. However, Simon Gleeson said that the effects will not be fatal because London will remain to be Europe’s financial centre for a short term. This will ensure that negotiations for market access and regulatory cooperation will be less difficult for Great Britain and the European Union.
London financial firms are waiting whether the United Kingdom can hold on to its passporting rights to allow them to trade freely with the EU. Since the Brexit vote, banks have issued stern warnings that thousands of jobs may shift to their rival financial centres in Europe or the United States if the UK loses its right to sell financial services to the EU.
If the United Kingdom loses it passporting rights, US banking giant JP Morgan said that about 4,000 jobs will be leaving the UK. Goldman Sachs has threatened that it will move 2,000 roles. HSBC has also claimed to transfer 1,000 positions from London to Paris.
According to Xavier Rolet, the chief executive of the London Stock Exchange Group, the industry of financial services must be given a 5-year transition period after Article 50 is triggered. During the transition, timing is very crucial because forcing the industry to reconfigure itself before inter-government agreement may result into inefficiency and wasted costs.
In the sequence of events, inter-governmental agreement must come first before the financial industry responds to the decision. In reaction to Theresa May’s clarification of the future relationships between the UK and EU, Anthony Browne of the British Banker’s Association said that existing member states of the EU will ensure that there is a smooth exit so that there will be no cliff-effects particularly for the financial sector.
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