Bank of England’s Woods says 75,000 Brexit finance job losses ‘plausible’
By Huw Jones and David Milliken
LONDON (Reuters) – Britain’s financial sector could lose up to 75,000 jobs as banks and insurers shift operations to the European Union after Brexit, Bank of England Deputy Governor Sam Woods said on Wednesday.
Woods told MPs that the 65,000 to 75,000 estimate was drawn up in a report from consultants Oliver Wyman and not the Bank of England.
“I would say in terms of a long-term possibility among one of many scenarios, I regard that in the plausible range of scenarios,” Woods said.
Banks and insurers have submitted plans to the Bank detailing how they would cope if their current level of access to the EU market ends in March 2019 when Britain leaves the bloc, and there is no subsequent transition period.
“In that context…I would say ‘Look, it’s a moving feast and we won’t know until we get there’ but you could reasonably think of a day-one movement of perhaps around 10,000,” Woods said.
“I would be surprised if it ends up being more than that for banks and insurance companies… That’s 2 to 3 percent of the City,” Woods said.
The trading deal struck between the EU and Britain will be the key determinant on long-term job moves, said Woods, who head’s the BoE banking supervision arm.
Financial firms operating in Britain who want to strengthen or set up a hub in the EU will start implementing their Brexit plans in the first quarter, Woods said.
Some banks have already reserved school places in EU countries and let office space.
This meant it was important for the UK government and the EU to agree a transition deal “the sooner the better” given that it was a “wasting asset”, Woods said.
Without a transition deal agreed by the start of 2018, the Bank will have to begin re-authorising 75 banks and 85 insurers from the European Economic Area, Woods said.
Barclays <BARC.L> said on Wednesday it was having to put in place Brexit plans without political clarity.
Jon Cunliffe, BoE Deputy Governor for financial stability, took aim at EU plans for clearing houses in Britain that process euro-denominated transactions to be jointly supervised by the bloc after Brexit.
As a last resort the clearer should relocate to the EU, a step Britain opposes.
“Is the Bank prepared to think about extending, developing the models we have for supervision…? – Yes,” Cunliffe told the committee.
The Bank already has an agreement with U.S. regulators over regulating a London-based clearing house that processes large amounts of dollar-denominated transactions.
But even this agreement includes “deference” to the home supervisor to avoid confusion.
“You have to make sure you don’t wind up with multiple hands on the steering wheel and multiple feet on the brake. It has got to be practical to reflect the balance of risks between the jurisdictions,” Cunliffe said.
(Reporting by Huw Jones, editing by David Milliken)