LONDON: More British finance firms will move business to EU countries if Britain fails to hammer out a post-Brexit transition deal by the end of the year, London Stock Exchange chief Xavier Rolet warned on Wednesday.
“Unless on this side of Christmas a credible announcement is made, then my understanding is that in the first quarter of next year, the implementation stage will start,” Rolet said, referring to contingency arrangements being prepared by businesses.
“In the absence of certainty in the next few months, the businesses, the CEOs, the boards the executive committees of many companies that are based here will have to start acting on worst case scenarios,” he said at a meeting with MPs in parliament.
Prime Minister Theresa May has backed a two-year transition period to ease the impact on the economy but she is beset by divisions within her own Conservative party and talks with Brussels are stalled over the size of the UK’s exit bill.
A transitional deal, which could involve joint supervision of the City finance district by EU and UK regulators, would reduce the chances of London being stripped of its ‘clearing’ role in processing international transactions made in euros.
Services account for 80 per cent of Britain’s economy, with access to markets such as the United States and China dependent on “global standards of complex regulation,” Rolet said.
This could be jeopardised by a ‘no deal’ scenario in which the UK exits the bloc without reaching a formal agreement, he argued.
Rolet also told parliamentarians that a three-year transition deal would be most ‘appropriate’ for financial markets -- and would benefit entrepreneurship and growth.
The LSE boss is the latest voice from the UK financial services sector to warn of the risks of Britain leaving the single market too abruptly.
Some City chiefs are also anxious over the loss of-called ‘passporting’ rights - which allow large international banks to be based in Britain whilst trading freely with other EU countries.
Published in Dawn, October 19th, 2017