- Outgoing Lord Mayor of London Dr Andrew Parmley warns of upcoming Brexit “exodus” if government fails to secure a transition deal.
- “We need clarity by Christmas. If we don’t get that we will see exodus from London,” he told BI in one of his final interviews as Lord Mayor.
- Banks need at least a year, if not longer, to set up branches and subsidiaries in Europe so will start moving staff to coincide with Britain leaving the EU in March 2019.
LONDON — The government and the City of London have just six weeks before they lose “the battle” to stop major financial institutions from shifting staff out of the UK as a result of Brexit, the City’s outgoing Lord Mayor has warned.
In an interview before the end of his one-year term as Lord Mayor, Dr Andrew Parmley told Business Insider that the government must work quicker to ensure that some form of transition deal with the EU is secured in the coming weeks and months, or risk seeing an “exodus” of talent from finance hubs like the City of London.
“I’m beating the drum as hard as I can. We need clarity by Christmas. If we don’t get that we will see exodus from London. At the moment that has been tempered, next to nobody has actually left, though, as you know, everybody has made plans,” Parmley told BI.
“All the big players have made their plans, and we will see those plans activated if we don’t see some progress.”
The government is listening to the concerns of the City, but is not acting quick enough, Parmley told BI.
“We had to work very hard to persuade parliamentarians that we are a bit different from the others, and we are the biggest industry, and make the biggest tax give. I think government is paying attention.”
Every month, the Lord Mayor holds a meeting of a group known as the Number One group, which contains major financial services bosses in the UK, and those leaders hold the same concerns as Parmley, he says.
“There’s a strong feeling amongst the Number One representatives that when politicians fail, business has to take charge. We are being heard, but they’re not responding quickly enough to what we’re saying,” he said at his office in the City’s Mansion House.
“That’s why my chairman of policy Catherine McGuinness is now really beginning to shout. I think we’ve got six weeks left before we’ve lost the battle.”
“If I could have a leaving present [Parmley will leave his role as the Lord Mayor in November], it would be a transition deal.”
Concern over securing a transition deal is driven by the fact that banks need to make final decisions about moving staff by the first quarter of next year at the latest. Banks need at least a year, if not longer, to set up fully functioning branches and subsidiaries in Europe to maintain uninterrupted EU activities.
Without some clarity over future arrangements, banks will look to their worst case contingency plans, which are generally believed to involve large scale staff moves. Banks, however, are somewhat unsure of what the worst case scenario is, according to Bertrand Lavayssière, the UK managing partner of financial services consultancy Zeb.
While most finance firms agree that jobs will have to move in a worst case scenario, Lavayssière said that contingency plans submitted by banks to the UK regulator show institutions have different ideas of what the worst outcome from Brexit could be.
Parmley’s view is one that has been publicly echoed by other senior City figures. Earlier in October, for example, Sam Woods, the chief executive of the Prudential Regulation Authority (PRA) said in a speech that firms are likely to start leaving if we don’t get a transition deal by Christmas.
“If we get to Christmas and the negotiations have not reached any agreement on this topic, diminishing marginal returns will kick in. Firms would start discounting the likelihood of a transition in the central case of their planning,” Woods said.
One major fear within the City is that if firms do start to leave the UK and move staff to continental Europe, the continent’s financial sector could fragment. Parmley, however, does not see any European financial centre benefitting hugely from any Brexit exodus. That’s because cities like Frankfurt and Paris simply don’t have the infrastructure in place to deal with any large scale staff moves.
“I think if we see fragmentation, I don’t think we’re going to see a great deal of movement into mainland Europe. I think if its going to go anywhere locally, it’s going to go to Dublin for language reasons, but it’s more likely to my mind to go to New York, Singapore or Hong Kong because they have got the infrastructure.”
“Frankfurt [as well as other European cities] hasn’t got the wherewithal to absorb a huge additional workforce,” he said.