27/01/2018 00:01 GMT

UK Firms Will Move Abroad If Brexit Trade Deal Not Agreed Soon, Lords Warn

Government urged to 'stop infighting'.

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UK firms will begin to activate their ‘Brexit contingency plans’ and move abroad if a trade deal with the EU is not agreed soon, a House of Lords committee has warned.

In their latest report, members of the EU financial affairs committee say both Britain and Europe risk market fragmentation and financial instability if they can’t agree a deal on market access once the UK has left the bloc.

Peers have called on the government to clarify what outcome it wants from phase two of Brexit negotiations and on transitional arrangements post-March 2019, or face companies putting in place “costly and potentially irreversible” contingency plans.

Committee chair and Lib Dem Baroness Falkner of Margravine said: “There is a risk of market fragmentation and financial instability if the UK loses access to the EU, as well as harm to customers and businesses. The UK’s financial services sector is a global asset and both sides should want it to continue serving clients throughout Europe.

“The financial services sector needs greater clarity from the government about what it wants after Brexit, and it needs it now. A transition period is meaningless without a destination.

“Brexit is an opportunity to tailor the regulatory regime to strengthen the UK’s financial services sector, but the UK must remain committed to the international standards put in place following the financial crisis and continue to shape them to ensure a robust regulatory regime.”

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Several firms from a variety of industries, including financiers Goldman Sachs, have warned they are fast-approaching a point when they will have no choice but to leave the UK.

The European Medicines Agency announced late last year that it would move its headquarters from London to Amsterdam.

Lib Dem leader Vince Cable said the Lords’ report should act as a “serious warning” to Theresa May’s cabinet following ructions within the Conservative Party this week.

Philip Hammond angered Tory Brexiteers by suggesting Britain and the EU would move only “very modestly” apart after the UK exits the union, but Downing Street insisted the PM still had “full confidence” in the chancellor on Friday.

Cable said: “This is a serious warning from a respected committee. Philip Hammond’s comments this week that the UK and EU economies will diverge only ‘very modestly’ shows he is desperate to reassure the City that nothing is really  going to change. 

“But obviously things will. Serious business people will, therefore, be assessing their options, including whether or not to relocate to other EU countries. 

“The Conservatives must stop their infighting and at least draw up some kind of coherent plan on what they want from Brexit talks.”