A Bank of England official has said Britain’s powerhouse financial services sector could shed 10,000 jobs on day one of Brexit and it was “plausible” the losses may reach 75,000.
Sam Woods, head of the Bank’s Prudential Regulation Authority (PRA), said the 10,000 figure was based on Brexit contingency plans submitted to the Bank by financial firms, which are assuming no replacement of passporting rights and no transition period beyond the end of March 2019.
While he made clear the 75,000 jobs number did not come from the Bank but consultants Oliver Wyman, he said it was a credible prediction of how Britain’s EU divorce may impact the finance sector.
Speaking to the House of Lords EU financial affairs sub-committee about the 75,000 jobs estimate, he said: “Now that’s not a Bank of England number and we haven’t specifically endorsed that report.
“However, I would say that in terms of a long-term possibility among one of many scenarios, I regard that within the plausible range of scenarios.”
Mr Woods said he would be “surprised” if more than 10,000 jobs left the finance sector, but admitted the number was a “moving feast”.
“Looking across all the plans we have had from banks and insurance companies…, you could reasonably think of the day one movement of perhaps around 10,000,” he added.
“I would be surprised if it ends up being more than that for banks and insurance companies.
“To put that in context, that is less than 1% of financial services jobs.”
His comments came as he urged the Government and the EU to have a transition agreement in place as soon as possible, otherwise the Bank would have to start work in the new year on authorising European financial firms so they can operate in the UK after Brexit.
He also backed Chancellor Philip Hammond’s view that a transition period was a “wasting asset” that loses its worth as time passes.
However, he said it did not mean its value “would suddenly plummet to zero at one particular point in the calendar”.
In a wide-ranging hearing, the committee also honed in on the passporting rights financial companies need to trade smoothly within the EU.
Sir Jon Cunliffe, the Bank’s deputy governor for financial stability, said the Bank never assumed passporting would continue after Brexit.
He said: “For the main banking services there is no equivalence, there is only the passport and our assumption was, once we left, a whole range of possibilities – from nothing to everything – was possible.
“As to where the City opinion is … now on passporting, it is difficult for me to say really, but I don’t hear much about it nowadays.”
Mr Woods said when passporting rights fall away, the structures of wholesale businesses – such as banks and insurance companies – would become even more complex.
Asked about the EU’s demand for joint supervision of euro-clearing houses post-Brexit, Sir Jon said co-operation was needed, but warned against having “multiple hands on the steering wheel and multiple feet on the brake”.