Some of the biggest financial institutions are preparing to move thousands of jobs out of Britain following Prime Minister Theresa May’s “Hard Brexit” proposal.
The frenzy comes as a result of May’s recent announcement that outlined the British government’s Brexit negotiation strategy, which involves leaving both the European single market and the European Union’s customs union. In a series of phone calls on January 17 to European leaders, including French President Francois Hollande and German Chancellor Angela Merkel, May said that Britain “cannot possibly” remain within the European single market, as staying in it would mean “not leaving the EU at all.”
May’s stance on a complete break from the European Union would mean that Britain is not only to be excluded from the countries permitting free movement of immigrants, but it would also lose access to the European Union’s single internal market. The single market acts as a complex organization that allows all European Union member states to trade with one another on a fairly equal basis, free from tariffs and other taxes that would result from foreign trade partners. May’s declaration that Britain would indeed leave the single market prompted many banks and financial services located in Britain to move jobs and internal operations to other countries in the European Union to ensure that they can continue doing business with the member states.
After the Brexit decision was made, many of the big London-based banks, including HSBC and Swiss Bank UBS, threatened that bankers would move elsewhere to continue doing business with other nations, but it was only after May’s recent announcement that these threats transpired. A managing director at risk consultancy Eurasia Group stated that exiting the single market is “terrible for financial services. It’s going to lead to a lot of disruption in the financial community,” thus prompting the radical movements out of Britain.
Responses have been rapid and profound. In a recent Bloomberg Television interview at the World Economic Forum in Davos, Switzerland, HSBC CEO Stuart Gulliver announced that he may relocate up to 1,000 London-based jobs to Paris. “Activities specifically covered by EU legislation will move, and looking at our own numbers, that’s about 20 percent of revenue,” he noted. Gulliver went on to say that the decision would proceed at a slower rate, but also acknowledged that “irrespective of Brexit, London will remain a global financial center, and the revenue impact of Brexit on financial services will be made good in two to three years’ time.”
Furthermore, UBS senior executive Andrea Orcel explained that the banks were “anticipating the worst.” He explained that if Britain and the European Union did not reach a mutual transition deal about Brexit soon, some of his staff would have to move in order to continue regular, stable business operations.
It would seem, then, that these significant plans are somewhat temporary, meant as part of a scheme to manage the immediate effects of Brexit on the global economy until the market stabilizes. How long that will take, however, is a question that remains to be answered, and probably won’t be for at least the next few years.