A report published on Thursday by the House of Lords Brexit committee, has called for urgent action to secure a “transitional deal” on EU passporting rights for the financial sector.
Baroness Falkner of Margravine, chair of the Lord’s EU financial affairs sub-committee, said financial institutions need to make decisions on whether to relocate if the UK is unable to preserve these rights.
“The government has a lot of work to do. First of all, it must, early in the negotiation process, agree a transitional period so as to prevent UK based financial services firms from restructuring or relocating on the basis of a ‘worst-case’ scenario.
“Last week, France’s leading financial regulator told the BBC that some major banks are in the advanced stages of planning to shift some operations from London to Paris,” she said.
She added that firms cannot wait until the end of Brexit negotiations, expected in 2019, to find out if they can trade in the single market from London.
“We are in danger of a lose-lose scenario if pragmatism does not prevail,” said Falkner, describing the UK current approach as “patchy, unreliable and vulnerable” to political influence.
“[The government] needs to determine as precisely as possible which firms currently rely on passporting and the degree to which equivalence provisions might provide a substitute,” she adds.
The committee has been supplied a range of estimates of the likely job losses to the financial services sector, which currently employs 1.1 million people – 60,000 EU nationals and 100,000 non-EU nationals.
