Britain's banking sector faces 'crunch time' ahead of May's set piece Brexit speech

LONDON — It is “crunch time” for the City of London’s future, a major financial lobby group has said ahead of Prime Minister Theresa May’s set piece Brexit speech in Italy.

“While negotiators have recently been talking about the importance of transitional arrangements, little progress has been made. For our industry, this really is crunch time,” Miles Celic, the CEO of lobbyist The City UK said.

“We need the UK and the EU27 to agree a time-limited and legally-binding transition period that resembles the status quo as closely as possible and applies across all sectors of the economy.”

“Both sides must seize this opportunity to move these negotiations forward, put people and jobs first and get a transitional deal done without delay.”

May will deliver what many believe is her most important speech since January on Friday, speaking from the Tuscan city of Florence. In that speech she is expected to soften the government’s stance on leaving the bloc and to
offer the EU a €20 billion divorce bill. That offer falls short of what the EU wants, but would mark a significant concession from the UK.

The €20 billion would fill the gap created in the EU’s budget by Brexit until 2020, ensuring that no member state would have to increase its contributions.

That offer comes against a backdrop of growing uncertainty about the number of workers that might be pulled out of Britain’s main financial hub, London, if a deal on the so-called financial passport cannot be reached.

A recent poll of financial firms by Reuters showed that roughly 10,000 workers could leave the capital as a result of Brexit, with numerous banks already confirming that they will shift staff to other EU financial centres, including Dublin, Frankfurt and Paris.

“Many firms are already moving parts of their operations out of the UK and Europe. When they have gone, it’s hard to see them coming back,” Celic said.

“Post-Brexit, it will fragment the market, hinder the provision of essential financial services to EU and UK enterprises and governments and likely increase the cost of products and services for customers right across the continent.”

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