The job drain in the financial sector is likely to start before Brexit negotiations conclude because banks are planning for a worst-case scenario.
Britain’s finance industry could lose up to 40,000 investment banking jobs in the next few years unless it strikes a softer deal on its departure from the European Union.
But many jobs could be lost before any deal is struck.
According to a new report by consultancy firm Oliver Wyman banks are currently planning for a worst-case scenario in which they lose access to the European single market once Britain leaves the bloc in 2019, as they say they do not have time to wait to see how Britain’s talks with Brussels unfold.
These initial moves could see around 12,000 to 17,000 banking jobs move out of London but with a number of issues, including around clearing, still to be hammered out, that number could more than double to 40,000, the consultancy estimated.
The wholesale banking sector, which includes sales and trading and investment banking, employs around 80,000 people in Britain, according to Oliver Wyman, so based on that figure about half of these jobs could move.
“The banks are working on ‘no regrets’ moves, which increase options but don’t cost that much either to undertake or to reverse,” Matt Austen, U.K. head of financial services at Oliver Wyman, said.
“Once you get to the point of putting balance sheet and capital into an entity, it becomes more committed. The economics really start to bite when banks start to deploy financial resources.”