London mayor says loss of bank access to EU market would be 'sabotage'

LONDON (Reuters) - Failing to maintain access for banks to the European Union market after Brexit would be an act of “economic sabotage” that would ripple across Britain, London Mayor Sadiq Khan will say on Thursday.

Britain Olympics - Team GB Homecoming Parade - London - London - 18/10/16 The Mayor of London Sadiq Khan during the parade Action Images via Reuters / Matthew Childs/ Livepic/ Files

Banks in Britain have said they are preparing to move staff and activities to mainland Europe as soon as next year unless access to the bloc’s single market is maintained.

Khan, a member of the centre-left opposition Labour Party, is due to make the remarks in a speech at a dinner in the City of London financial district. He will also say that mishandling Brexit might have the biggest impact on financial services since “Big Bang” deregulation 30 years ago.

That event helped to propel London to the top of the global financial centre league tables, a ranking that will be hard to keep without EU market access, bankers have said.

“If the proper agreements aren’t negotiated, there will be serious knock-on impacts with jobs and billions of revenues lost - something that would hit the entire country, not just London,” Khan will say.

“It’s frustrating, to say the least, that much of what we are saying seems to be falling on deaf ears.”

While Khan’s remit as mayor does not include responsibility for setting financial policy in London, he is the capital’s most high-profile advocate and one of the Labour Party’s most influential figures.

But Khan’s position jars with that of John McDonnell, Labour’s most senior finance spokesman, underlining the rifts within Labour which critics say are watering down the party’s influence on the Brexit process.


In a separate speech on Thursday, McDonnell accused the ruling Conservative party of looking to cut a special deal for Britain’s financial sector.

“Tory (Conservative) cabinet members are looking to cook up special deals for their friends in the City of London,” he said.

“They want a ‘Bankers’ Brexit’, in the interests of an elite few, not the majority.”

McDonnell, who was last month criticised by business groups for setting out a left-wing economic agenda, said that while he wanted to defend banks’ access to the EU single market, in return they had to “show clearly that they are delivering for this country”.

Khan will call for the government to aim for a “unique” deal with the EU that would avoid denting financial services, the economy’s single biggest sector.

“If we fail to get a good Brexit deal, businesses are more likely to move to New York, Singapore and Hong Kong than to other cities in Europe,” Khan will say.

A tenth of workers in the City are from other EU countries.

Banks in London have an “EU passport” allowing them to operate freely across the bloc, but bankers expect that after Brexit, any access to the European market will be on less favourable terms than now.

Editing by Andrew Roche