The British Financial Industry could lose up to £38 billion (43 billion euro) in revenue if the UK undergo a so-called “Hard Brexit” restricting access to the European single market. This will result in the UK being subject to both tariffs and non-tariff barriers.
A report by Oliver Wyman ordered by the industry lobby group TheCityUK, summaries two different outcomes following a “Hard Brexit”. One outcome would see the UK cut all ties with the single market. If this were to happen, revenue may fall by £20 billion causing a further drop of £18 billion from related business’. Consequently up to 75,000 jobs may be lost.
However, in another scenario the UK would maintain their access to the European Economic Area. This would therefore have a less significant impact on the industry seeing a £2 billion fall in revenue and the loss of 4,000 jobs.
Following talks between the BBC and Head of Oliver Wyman Hector Sants, Hector expressed they were not “taking a view on the outcome of the negotiations” but have generated “a robust and independent database” in which “people can coalesce around and discuss”. This report however has been branded a “scare story” by “Kevin Dowd” a member of the campaign group Economists for Brexit. He indicated that “Most of our financial services business is actually outside the EU, and our share of business with the EU is declining anyway.”
Britain leaving the EU will additionally have restrictions on EU’s single-market regulations and the free movement of people across EU countries. However, Brexiteers are seeking agreements to allow Britain maintain their access to the single market while governing their own laws, borders and money. The UK Economy has begun to show effects following the Brexit announcement, with the sterling rate reaching a 31 year low. However, pre-referendum predictions around the weakening of the economy are likely to become clear next March following Prime Minister’s Theresa May’s announcement surrounding Article 50. Markets have already been predicting a further drop in the pound to anywhere between 1.11 and parity.
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