DAVOS, Switzerland — Britain has a number of sectors that will suffer in terms of funding and jobs post-Brexit and finance won’t be the one victim, says one of the most prominent economists in the UK.
Professor Erik Berglof, director of the Institute of Global Affairs (IGA) at the London School of Economics, told Business Insider in an interview at the World Economic Forum that “the kind of total break in areas like the automotive industry, aerospace, and other sectors” will be “disastrous.”
“There is still a chance that something reasonable is going to [come out of Brexit talks between the UK and the European Union] because there is a common [ground] at stake for industries such as aerospace technology ” said Berglof, who was previously the chief economist and special adviser to the President of the European Bank for Reconstruction and Development (EBRD).
“But another area where people have not fully anticipated [a big impact] on jobs is in academia. The university space is so fragile at the moment and if there are greater restrictions on visa requirements as well as a difference in fees, it is going to hit academia in a very bad way.”
In Britain, tuition fees cost up to £9,250 a year for students who originating from the UK or EU
. For those considered as international students, fees are much higher. For example, base fees for international students attending Oxford University are between £15,755 and £23,190 a year, plus £7,350 a year to the college that they attend within the institution.
However, what Berglof is pointing out is that if the Home Office makes European students pay the same university rates as non-EU nationals after Brexit, this could wreck havoc on academia.
Earlier this month, a report from the Higher Education Policy Institute (HEPI) said that a post-Brexit drop in the number of EU students coming to the UK to study could cost the economy £2 billion a year.
Political leaders and big business and banking boss warn of job losses
Berglof also mentioned how Brexit uncertainty is already affecting the financial sector.
“Quite a lot of it comes down to passporting and passports available and it’s extremely important [to London firms] that there is an equivalence of what Britain has now is used post-Brexit, but I am not sure this is enough for the financial sector [to continue the way it is now],” said Berglof.
Over the last week, a number of business leaders and politicians have warned that Brexit, especially a “hard Brexit,” will hurt jobs in Britain and in some cases, the effect is being felt already.
Alain Dehaze, CEO of the largest staffing firm in the world Adecco said “we started seeing some effects of uncertainty, with a slightly lowering rate of high-skilled permanent hires, especially in the London area.“
Mayor of London Sadiq Khan also warned that “hard Brexit” is terrible for the European Union as well as Britain because if businesses relocate, it will be to Asian countries or the US, not other European cities.
And Labour party leader Jeremy Corbyn believes that job losses in the UK could be “huge” if Britain does not manage to secure a favourable trading relationship with the EU following Brexit.
But it is the banks that have been the most vocal about relocation, which could end in thousands of jobs lost across Britain, but mainly London.
This is because the loss of passporting rights following Brexit is one of the biggest fears in the City of London and seems almost a certainty under May’s “Hard Brexit” plan.
If the passport is taken away, London could cease to be the most important financial centre in Europe, costing the UK thousands of jobs and billions in revenues. Around 5,500 firms registered in the UK rely on the European Union’s passporting rights for the financial services sector, and they turn over about £9 billion in revenue.
Goldman Sachs is considering cutting its staffing numbers in London by up to 50% due to Brexit fears, according to a report on Thursday, while JP Morgan CEO Jamie Dimon said that more jobs than previously expected may have to be moved out of the UK as a result of Britain leaving the EU. HSBC CEO Stuart Gulliver has said that Brexit will push bankers making 20% of London revenue to Europe.