• Category: News

Brexit to cost 30,000 finance jobs in UK, Says Think-tank

Research indicates that Brexit could have a significant impact on the UK finance sector.

Brexit to cost 30,000 finance jobs in UK, Says Think-tank

According to a new report by Bruegel, the Brussels-based think-tank, the UK risks losing up to 30,000 jobs in the finance sector due to Brexit. Even then, the UK’s rival in the EU need to put measures in place that will mitigate the potential spreading of banking risk throughout the continent.

Bruegel, which is closely associated with the European commission, reported that the City of London alone is set to lose as many as 10,000 jobs in the banking sector and another 20,000 in related occupations including law, accountancy and financial consulting. This would be as a result of clients in the EU choosing to move business worth an estimated £1.6tn from the UK following the country’s decision to leave the region.

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Financial risk

The think-tank also postulated that Frankfurt, Paris, Dublin and Amsterdam would likely benefit the most from the job transfers. However, the researchers say that there remains a high risk of a banking crisis if a financial meltdown were to happen when there is a geographically heterogeneous presence of financial institutions operating without robust oversight.

These imminent risks could be mitigated and spread out if the EU adopted a common regulation for investment banks as opposed to having 27 different regulations with each country attempting to replace London as Europe’s financial center.

The report is based on the researchers’ assumption that Theresa May’s word will stand and that the results of the referendum are honored so that the UK actually leaves the single market.

According to the think-tank, “Brexit could pose a risk for stability and the integrity of the market given that the EU, including the UK has been vitally dependent on the UK Financial Conduct Authority and the Bank of England to oversee the entire market.”

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Need for post-Brexit discussion 

As a result of this exclusive dependence on UK institutions, the remaining 27 countries in the EU have no choice but to quickly implement structures that will protect the region’s financial stability and market integrity.

One of the authors of the report, Nicolas Véron, said the EU faced several risks and opportunities. Even then, discussions on the financial implications of Brexit are yet to be discussed.

He noted, “What’s important for the 27 countries in the EU is finding their feet in the new financial landscape after Brexit.”

He added that instead of creating 27 replicas of the Bank of England and the FCA, the EU should focus more on building a consistent and centralized system to oversee financial institutions and regulate their conduct.

London is likely to become a flashpoint following Britain’s decision to leave the EU. London is undeniably Europe’s financial center with two times as many euros exchanged in the City as in the 19 countries sharing the single currency put together.

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Still optimistic

Bruegel has a history of advocating for banking union in the EU envisioned as a system of banking rules for the Eurozone. Unsurprisingly, research by the think-tank is widely circulated and highly considered in many institutions in the EU.

Véron was optimistic that in spite of the slowdown in political momentum this year due to the elections in France, Netherlands and Germany, the EU would act to implement sound structures to protect the region’s financial system against the imminent risks.

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