The damage to the City from Brexit is “going to be quite considerable over time” and will result in job losses, the chairman of RBS has warned.
Sir Howard Davies said there would “definitely be a cost” to British jobs, adding that the question was whether Britain could negotiate enough market access so that the cost is not tens of thousands.
Sir Howard said there were some business concerns that “it is taking quite a long time to get to the nitty-gritty of what a new trading relationship with the EU would be”.
He added: “Certainly some time, I think, has been wasted up to now in negotiations which haven’t really got anywhere”.
With the publication of a series of position papers and meetings with business leaders of a “more intense kind than before”, there were signs the tovernment “do appreciate that it is really urgent to get to the proper negotiations”.
The Prime Minister’s Florence speech was a significant step forward but “whether a big enough step to unblock the negotiations, we’ll only see in the next few weeks”.
Asked if the tovernment recognised the banking sector was already beginning to suffer, he said: “I hope so because we keep telling them and I think the financial sector has been telling them very, very firmly. Now some of this of course is inevitable, I’m afraid, that if we go in for Brexit we will find that jobs will leave the City and there will be a rebalancing of financial activity within Europe.”
Asked if Britain would lose jobs in the City as a result of Brexit, he replied: “Yes”. Giving an assessment of the impact, Sir Howard forecast a movement of jobs to the Continent.
He added: “I think it is going to be quite considerable over time because up to now people have centred their European activities – and we are talking particularly about the American banks, the Japanese banks, even the Chinese banks and they have chosen to put an enormous lion’s share of their activity in Europe based in London and they are now rebalancing.
“That’s going to happen whatever the outcome of the Brexit negotiations are.
“So the game is can we provide an outcome which minimises that cost? It will not remove it, it will definitely be a cost and the question is can we negotiate enough market access so that that cost is at the margin, is a few thousand people and not tens of thousands.”
A no deal scenario would be “bad news” and potentially lead to “some quite large moves of people”.
Signs of the Brexit impact, he added, could already be seen with the fall in London property prices.
Sir Howard said he believed the number of moves of people out of London will accelerate if there were no details on the transition period by the first quarter of next year.
The timing to hammer out all of the details was very tight indeed, he said.
He added: “I think what we are seeing now is the unwisdom of triggering Article 50 when we did without knowing what the end point was and I’m not sure why we really did that.”