Big international banks are preparing to move some of their operations out of Britain in early 2017 due to the uncertainty over the country's future relationship with the European Union, a top banking official said.
Writing in the Observer newspaper, Anthony Browne, the chief executive of lobby group the British Bankers' Association, said the public and political debate was "taking us in the wrong direction" and businesses could not wait until the last minute. "Most international banks now have project teams working out which operations they need to move to ensure they can continue serving customers, the date by which this must happen, and how best to do it," said Browne. "Their hands are quivering over the relocate button. Many smaller banks plan to start relocations before Christmas; bigger banks are expected to start in the first quarter of next year."
Many of the world's major banks have their European headquarters in Britain, where the financial sector employs more than two million people and makes up almost 12 percent of the economy.
Banks in London depend on a European "passport" to serve clients across the 28-country European Union from one base and lenders worry that this right will end after Brexit.
Browne said while finance minister Philip Hammond and Brexit minister David Davis were "making the right noises", he was concerned that some high-profile Brexit supporters believed banks did not need passporting and could rely on so-called equivalence, under which the EU can allow access to its markets for countries whose regulations are similar to the bloc's. "The EU's equivalence regime is a poor shadow of passporting, it only covers a narrow range of services, can be withdrawn at virtually no notice, and will probably mean the UK will have to accept rules it has no influence over," he said. "For most banks, equivalence won't prevent them from relocating their operations."
Banks have already said they are making contingency plans to move some of their operations to continental Europe if Britain does not negotiate access to the EU single market after Brexit.
Prime Minister Theresa May has said she will trigger formal talks to leave the EU by the end of March 2017 after Britain voted to leave in a referendum last June. She has said she will fight to retain access to the single market but several EU leaders have insisted that will depend on Britain accepting free movement of workers from the EU - a condition Britain has vowed to curtail.