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Brexit could spark City exodus as 80,000 jobs are moved to Europe, BCG says

Around 20% of banking and financial jobs may be moved to another European centre like Frankfurt

Hazel Sheffield

Thursday 07 July 2016 13:20 BST

Banks and other companies are discussing whether they will need to move European headquarters to the EU (Getty)

Up to 80,000 banking and finance jobs could be moved from London to other centres in Europe in a job exodus worse than all the years of the financial crisis because of Brexit, according to the Boston Consulting Group.

BCG asked 360 leading bankers in the UK, France, the US and Germany about their thoughts on the impact of Brexit in the run up to the referendum.

They said London could be drained of 20 per cent of jobs, worse than the 55,000 jobs lost in London's financial sector during the years of the financial crisis between 2007 and 2010.

Banking jobs including international payments transations, investment banking and trading are likely to be affected, BCG said.

Insurance, pharmaceutical and biotechnology jobs could also go, the company said.

Dr Wolfgang Dorner, banking expert and head of BCG Frankfurt, urged Germany cities and companies to welcome the influx of professional staff.

He said German cities: "should prepare for job relatocations in various industries and actively seize the opportunities offered by this influx of qualified workers."

France has also promised to welcome bankers and banking operations if companies lose passporting, or the ability to do business with the whole of the EU, after Brexit.

Banks and other companies are discussing whether they will need to move European headquarters to the EU to keep the same privileges.

6 ways Britain leaving the EU will affect you

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1/66 ways Britain leaving the EU will affect you

6 ways Britain leaving the EU will affect you

More expensive foreign holidays

The first practical effect of a vote to Leave is that the pound will be worth less abroad, meaning foreign holidays will cost us more

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6 ways Britain leaving the EU will affect you

No immediate change in immigration status

The Prime Minister will have to address other immediate concerns. He is likely to reassure nationals of other EU countries living in the UK that their status is unchanged. That is what the Leave campaign has said, so, even after the Brexit negotiations are complete, those who are already in the UK would be allowed to stay

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6 ways Britain leaving the EU will affect you

Higher inflation

A lower pound means that imports would become more expensive. This is likely to mean the return of inflation – a phenomenon with which many of us are unfamiliar because prices have been stable for so long, rising at no more than about 2 per cent a year. The effect may probably not be particularly noticeable in the first few months. At first price rises would be confined to imported goods – food and clothes being the most obvious – but inflation has a tendency to spread and to gain its own momentum

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6 ways Britain leaving the EU will affect you

Interest rates might rise

The trouble with inflation is that the Bank of England has a legal obligation to keep it as close to 2 per cent a year as possible. If a fall in the pound threatens to push prices up faster than this, the Bank will raise interest rates. This acts against inflation in three ways. First, it makes the pound more attractive, because deposits in pounds will earn higher interest. Second, it reduces demand by putting up the cost of borrowing, and especially by taking larger mortgage payments out of the economy. Third, it makes it more expensive for businesses to borrow to expand output

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6 ways Britain leaving the EU will affect you

Did somebody say recession?

Mr Carney, the Treasury and a range of international economists have warned about this. Many Leave voters appear not to have believed them, or to think that they are exaggerating small, long-term effects. But there is no doubt that the Leave vote is a negative shock to the economy. This is because it changes expectations about the economy’s future performance. Even though Britain is not actually be leaving the EU for at least two years, companies and investors will start to move money out of Britain, or to scale back plans for expansion, because they are less confident about what would happen after 2018

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6 ways Britain leaving the EU will affect you

And we wouldn’t even get our money back

All this will be happening while the Prime Minister, whoever he or she is, is negotiating the terms of our future access to the EU single market. In the meantime, our trade with the EU would be unaffected, except that companies elsewhere in the EU may be less interested in buying from us or selling to us, expecting tariff barriers to go up in two years’ time. Whoever the Chancellor is, he or she may feel the need to bring in a new Budget

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Before the vote, Stuart Gulliver, HSBC’s chief executive, said that Brexit could see 20 per cent of its 5,000 London investment bankers moved out of London to Paris.

Richard Branson: 'Virgin has lost a third of its value'

Goldman Sachs also issued several warnings that it would be likely to move some staff out of the City if the UK voted to quit the 28-member bloc.

Both banks reiterated their commitment to the UK after the referendum results came in and said they would not make any immediate staffing changes.

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