LONDON (Reuters) - Job moves from Britain’s financial sector to the European Union by Brexit Day on March 29, 2019, may not be as high as initially estimated, the Bank of England said on Thursday.
Sam Woods, BoE deputy governor for banking supervision, had told British lawmakers last year that about 10,000 jobs would move from Britain to the EU by Brexit Day to staff new hubs needed by banks and insurers to continue serving European customers.
“My estimate remains that that number is in the 5,000 to 10,000 window,” Woods told a meeting of parliament’s Brexit committee on Thursday.
Woods added that since he gave the 10,000 figure, there has been a “slight downward drift” to the lower end of that number from the upper end.
He elaborated on his previous statement, saying about a fifth of the jobs would be newly created in the E27, rather than lost from Britain.
But how many jobs would move over the long term would depend on what sort of trade deal Britain gets with the EU, Woods said.
Woods’ revised figure chimes with an estimate by Reuters.
Britain’s financial sector is the largest contributor of taxes, over 70 billion pounds a year.
Stephen Jones, chief executive of UK Finance, a banking trade body, told the Brexit committee he agreed with Wood’s jobs forecast.
“I heard Sam talk about 5,000 to 10,000 in this initial assessment. I would agree with that as an initial assessment of the initial loss of jobs in wholesale banking and I would also concur with Sam in that a loss of jobs may be wrong,” Jones said.
“They may be new jobs created in continental Europe, without necessarily displacing jobs here. But banks need to efficient and the idea of duplication is unlikely to be sustainable. So I fear eventually we are talking about a loss of jobs,” Jones added.
Britain and the EU have secured a “standstill” transition deal lasting from Brexit Day to the end of 2020, but is not due to be ratified until at October as part of a broader divorce settlement, meaning it has no legal certainty until then.
Andrew Bailey, Chief Executive of the Financial Conduct Authority, told the committee it does not provide the necessary certainty to “reset” the planning assumption that all Brexit related changes by banks must be done by next March.
Meanwhile, there was a need to start work on technical solutions for issues like ensuring that derivatives and insurance contracts are still enforceable during the transition period, and not lose time by waiting until transition is ratified, Bailey said.
“What that requires is for the EU authorities to engage. We are ready to go. We have done a lot of work on this,” Bailey said.
“My strong preference would be we start now to put together the agreed ways of tackling these issues,” Bailey added.
A framework on future relations in financial services could be agreed this year, Bailey said. It would need a mechanism to resolve disputes over financial rules.
Reporting by Huw Jones and Andrew MacAskill; Editing by Catherine Evans