HSBC is preparing to move 1,000 workers from London to Paris because of confusion over the UK’s Brexit plans, the bank’s boss told MPs today.
Douglas Flint, group chairman of HSBC, said his company was putting in place plans to shift some activities to the continent if the UK lost so-called passporting rights into the EU.
He revealed HSBC could begin moving staff and operations even before the two-year negotiation period triggered by Article 50 comes to an end.
Flint also warned that other international banks are thinking “very quickly and very carefully” about deserting the City of London.
His comments were supported by Xavier Rolet, chief executive of the London Stock Exchange, who revealed that some of the company’s customers “would not wait” for the outcome of the Brexit deal before quitting the UK.
Speaking to members of the Treasure Select Committee this morning, Flint said: “We would take preemptive action in order to ensure that we had the capacity in place in order to be able to continue to deliver what we deliver today from a different set of arrangements.
“We are in perhaps a better position than many having a full service bank already in France and therefore we have an operation already in the European Union.”
When asked by Committee chair Andrew Tyrie to provide some “scale of the move to Paris”, Flint replied: “It would be something like a thousand jobs.”
The future of the financial service sector is one of the great unknowns in the Brexit negotiations.
As the UK is a member of the EU, many international banks use London as a base to access the Single Market and offer certain types of financial services.
If the UK was no longer able to offer such products, banks could relocate to another financial hub, such as Paris or Frankfurt.
A delegation from Paris is due to meet with firms in the City of London next month to talk up what the French capital has to offer.
Speaking today, Flint said: “If you are foreign institution hubbing into Europe from London you really have no choice than thinking very quickly and very carefully how you replicate the access to Europe that you would lose once the UK leaves the EU.”
Rolet and Flint also called for a three-year delay after Article 50 expires to allow the financial sector to get its house in order after a Brexit deal is agreed.
After Huff Post UK reported the comments, Labour’s Chuka Umunna, a supporter of the pro-EU Open Britain campaign, said: “The Government’s casual attitude to the Single Market is already resulting in jobs leaving the UK.
“This is dreadful news for the City, our wider economy, and our public services. Leave campaigners promised Brexit would create jobs – they just didn’t say those jobs would be in France rather than Britain.”
Liberal Democrat MP Tom Brake said today’s warnings should serve as a “wake-up call” to the Government.
He said: “This government risks sparking an exodus of companies fleeing a hard Brexit.
“Yet Theresa May seems hell-bent on taking Britain out of the Single Market with no regard for the jobs and tax income that will be lost.”
He added: “If Theresa May does pull Britain out of the Single Market, she will go down in history as the Prime Minister who crashed the economy.”
The desertion of international banks from the UK would have implications for the UK economy, as the City of London contributes 3% to country’s total GDP, and 11.5% of total tax receipts.