Pessimism:  UK finance minister Philip Hammond called for a transition phase of a few years. Executives are pessimistic about Britain getting a deal because it must first agree on exit terms. Picture: REUTERS
Pessimism: UK finance minister Philip Hammond called for a transition phase of a few years. Executives are pessimistic about Britain getting a deal because it must first agree on exit terms. Picture: REUTERS

London — Britain must negotiate a staggered departure from the EU in the next months, or risk seeing thousands of finance jobs move overseas, the policy chief of London’s financial district said.

The City of London, home to global foreign exchange, bonds and fund management operations and to more banks than any other financial centre, faces upheaval as firms decide whether to shift jobs to continental Europe to keep serving customers there after Britain leaves the EU in 2019.

Catherine McGuinness, in practice the political leader of the historic financial district’s municipal body, said Britain and the EU must agree the outlines of any transition before the end of 2017, or it will be too late.

Britain and the EU began a first round of Brexit negotiations on Monday.

McGuinness, a financial lawyer and finance industry veteran who is in regular contact with the government over policy issues, said some firms in the sector had started relocating parts of their businesses overseas amid frustration at the lack of clarity about what any Brexit deal might look like.

"People need to know now," McGuinness said, Firms might move up to 15,000 finance jobs without any deal, she said.

"Decisions are already being made. We need a clear pledge from both sides of a transition period so that there is clarity for business. We need this as soon as possible, ideally by the end of [2017]," she said. For Britain, a lot is at stake.

Financial services account for more than a 10th of British economic output, and the industry contributed £71.4bn in corporate and employee taxes to the government in 2016.

A spokesman for Prime Minister Theresa May said on Monday that the government wanted what he called an implementation phase. However, the details of any deal would be subject to negotiations, he said.

Finance minister Philip Hammond called for a transition phase of a "couple of years" on Sunday. Senior government ministers were becoming more convinced of the need for such a deal, he said.

But McGuinness said there was confusion about which industries would be covered, how long the phase would last and any discussions on such a deal might come late in the divorce process.

Executives are pessimistic about Britain getting a deal in 2017 — if at all — because they say it must first agree exit terms, notably the rights of expatriate citizens and any money it owes the EU.

McGuinness also urged Britain to take a more conciliatory approach after Foreign Secretary Boris Johnson said Brussels could "go whistle" if they expected Britain to pay a divorce bill for leaving the bloc.

"We need to remember that we are the ones walking out the room," she said.

Reuters

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