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You can find the current article at its original source at https://www.theguardian.com/politics/2017/aug/01/nicky-morgan-assessment-citys-readiness-hard-brexit
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| Nicky Morgan requests assessment of City's readiness for hard Brexit | Nicky Morgan requests assessment of City's readiness for hard Brexit |
| (6 days later) | |
| The Conservative MP Nicky Morgan has asked the Bank of England to provide comprehensive details of the City’s readiness for a hard Brexit, in an early indication of the agenda she hopes to pursue as head of one of parliament’s most influential committees. | The Conservative MP Nicky Morgan has asked the Bank of England to provide comprehensive details of the City’s readiness for a hard Brexit, in an early indication of the agenda she hopes to pursue as head of one of parliament’s most influential committees. |
| The newly elected chair of the Treasury select committee also called on the Bank to provide its views on what a Brexit transition deal should look like to minimise damage to the City. An analysis by the consultancy firm Oliver Wyman calculated that up to 40,000 jobs in the wholesale banking sector – which provides services to companies – could be at risk. | The newly elected chair of the Treasury select committee also called on the Bank to provide its views on what a Brexit transition deal should look like to minimise damage to the City. An analysis by the consultancy firm Oliver Wyman calculated that up to 40,000 jobs in the wholesale banking sector – which provides services to companies – could be at risk. |
| Morgan issued her request to Sam Woods, a deputy governor at the Bank, which had given hundreds of banks, insurers, fund managers and other major City firms a deadline of July 14 to demonstrate how they would cope with a hard Brexit. | Morgan issued her request to Sam Woods, a deputy governor at the Bank, which had given hundreds of banks, insurers, fund managers and other major City firms a deadline of July 14 to demonstrate how they would cope with a hard Brexit. |
| Morgan told Woods that the committee – which is still being constituted and will not meet until the autumn – may want to consider the implications for financial services of the UK leaving the EU and that she wants him to provide the information, without providing specifics about each firm, by Wednesday. | Morgan told Woods that the committee – which is still being constituted and will not meet until the autumn – may want to consider the implications for financial services of the UK leaving the EU and that she wants him to provide the information, without providing specifics about each firm, by Wednesday. |
| Morgan said: “The cliff edge facing businesses in April 2019 is a cause for concern, particularly in the financial services sector. Based on the information the PRA [Prudential Regulation Authority] has collected, I have asked Sam Woods about how banks and insurers will respond as the Brexit deadline approaches, and the key risks of a ‘no deal’ scenario. | Morgan said: “The cliff edge facing businesses in April 2019 is a cause for concern, particularly in the financial services sector. Based on the information the PRA [Prudential Regulation Authority] has collected, I have asked Sam Woods about how banks and insurers will respond as the Brexit deadline approaches, and the key risks of a ‘no deal’ scenario. |
| “I have also asked Mr Woods for his views on the desirability and design of a transitional arrangement with the EU, to provide more time to negotiate and prepare for a new UK-EU economic relationship. Getting these arrangements right will be crucial for ensuring that the City retains its pre-eminence as a global financial centre, and to protect the economy and jobs as the UK leaves the EU.” | “I have also asked Mr Woods for his views on the desirability and design of a transitional arrangement with the EU, to provide more time to negotiate and prepare for a new UK-EU economic relationship. Getting these arrangements right will be crucial for ensuring that the City retains its pre-eminence as a global financial centre, and to protect the economy and jobs as the UK leaves the EU.” |
| The Bank had called on firms to spell out plans that would allow them to keep operating in the “most adverse potential outcomes” – a hard Brexit – as well as the UK leaving the EU without a trade agreement, no implementation period, no cooperation over regulation, and no “mutual recognition”, which allows products to be sold cross-border. | The Bank had called on firms to spell out plans that would allow them to keep operating in the “most adverse potential outcomes” – a hard Brexit – as well as the UK leaving the EU without a trade agreement, no implementation period, no cooperation over regulation, and no “mutual recognition”, which allows products to be sold cross-border. |
| Major City firms have started to publicise their plans. Bank of America said it would pick Dublin for its post-Brexit EU hub, as did Barclays. Morgan Stanley has picked Frankfurt and could relocate about 200 staff there, while Citi is also expanding its presence in the German city. | Major City firms have started to publicise their plans. Bank of America said it would pick Dublin for its post-Brexit EU hub, as did Barclays. Morgan Stanley has picked Frankfurt and could relocate about 200 staff there, while Citi is also expanding its presence in the German city. |
| It is not just US firms that are making plans. Japan’s Mitsubishi UFJ is reportedly going to select Amsterdam to cope with Brexit. | It is not just US firms that are making plans. Japan’s Mitsubishi UFJ is reportedly going to select Amsterdam to cope with Brexit. |
| Oliver Wyman’s report, published on Tuesday, said Frankfurt and Dublin were the main destinations for sales and trading activities after Brexit. Its analysis puts between 35,000 and 40,000 wholesale banking jobs at risk if the UK’s exit from the EU also leads to other services moving, such as clearing euro-dominated trading. | Oliver Wyman’s report, published on Tuesday, said Frankfurt and Dublin were the main destinations for sales and trading activities after Brexit. Its analysis puts between 35,000 and 40,000 wholesale banking jobs at risk if the UK’s exit from the EU also leads to other services moving, such as clearing euro-dominated trading. |
| A year ago, the consultants found that a hard Brexit would cause up to 35,000 jobs to leave the UK across all elements of financial services, with 12,000 to 17,000 in wholesale banking. “Based on banks’ subsequent disclosures and our engagement across the industry, we believe this remains a sound estimate of the impact in the medium term,” the consultancy said in its update. | A year ago, the consultants found that a hard Brexit would cause up to 35,000 jobs to leave the UK across all elements of financial services, with 12,000 to 17,000 in wholesale banking. “Based on banks’ subsequent disclosures and our engagement across the industry, we believe this remains a sound estimate of the impact in the medium term,” the consultancy said in its update. |
| But the movement of jobs could be greater, they said, as banks found commercial reasons to relocate staff and with changes to the wider structure of the financial system. | But the movement of jobs could be greater, they said, as banks found commercial reasons to relocate staff and with changes to the wider structure of the financial system. |
| The work could add up to 4% to the annual cost bases of banks – about $1bn (£755m) across the industry – and force them to hold up to $50bn more capital, cutting profits. | The work could add up to 4% to the annual cost bases of banks – about $1bn (£755m) across the industry – and force them to hold up to $50bn more capital, cutting profits. |
| So far, banks were trying to restrict their Brexit responses to “no regrets” – costing little by applying for new licences – but in the next six to 12 months they would have to embark on options that cost more and were harder to reverse, the report said. | So far, banks were trying to restrict their Brexit responses to “no regrets” – costing little by applying for new licences – but in the next six to 12 months they would have to embark on options that cost more and were harder to reverse, the report said. |
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