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UK: Bank of England forsees thousands of job losses after Brexit

posted onOctober 31, 2017

The Bank of England is expecting up to 75,000 job losses in financial services if the U.K. crashes out of the bloc in March 2019 without a deal the BBC reported on Tuesday. The number is the bank's "reasonable scenario" and originates from a report by management consultancy Oliver Wyman published in 2016 but could change depending on the UK's post-Brexit trading deal.

The UK’s top bank reckons 10,000 jobs will leave on day one of Brexit, with most expected to leave within the next five years. The Wyman report estimates up to 40,000 jobs could be lost directly from financial services, and the rest would be lost in the legal and professional services sector. The report also argued that there could be opportunities from Brexit, such as providing financial services for emerging markets including China and India.

“It is vital that the EU and the UK avoid such a ‘no deal scenario’. This outcome will see few winners, with UK and EU customers likely to bear the brunt in the form of reduced choice and cost increases,” Reuters quoted Miles Celic, chief executive of TheCityUK, the industry group that commissioned Oliver Wyman, as saying.

A Reuters survey of more than 100 finance firms showed last month that around 10,000 finance jobs would likely be shifted out of Britain or created overseas in the next “few years” following Brexit.

Other institutions have forecast very different numbers for job losses. Bruegel, a Brussels-based think tank, said in February that over time 30,000 jobs could move to the continent or be lost as London's financial sector shrinks. London Stock Exchange chief executive Xavier Rolet said in January the figure could top 200,000 if the government fails to provide a clear plan for post-Brexit operations.

Some firms have started to moving jobs out of London. Many of these jobs are expected to go to Frankfurt. UBS, the world's biggest private bank, said on Friday it may relocate 250 jobs while JP Morgan said it might have to move 1,000. Goldman Sachs’s chief executive Lloyd Blankfein said on Twitter that he will be spending "a lot more time" in Frankfurt despite the American bank building a large new HQ in London.

A representative from the BOE declined to comment on the BBC report, but did confirm that the central bank has asked the UK-based financial institutions to prepare for the impact of Brexit.Two deputy governors at the Bank of England whose roles cover financial services, Sam Woods and Jon Cunliffe, are set to speak to a committee in Parliament about Brexit on Wednesday.

But even with that scale of losses, London would still be by far the largest European financial centre with over one million people employed in financial services.

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