Top British banking officials have called the Brexit departure period too short and unrealistic for banks to cope with. The chief executive of the British Bankers’ Association, Anthony Browne, said there was a need for a transitional agreement, beyond the stipulated period. Once the UK begins formal proceedings to leave the EU by enforcing ‘Article 50’, it will have two years to leave completely, even if no new trade agreements are made. The danger for banks as it stands, is that they will be unable to carry out trade in the EU without restrictions and added costs. Browne said banks are waiting for talks to bear fruit or for at least some certainty as to what to expect. For banks to relocate to Europe, it will take them several years and considerable investments.
The losses for UK would be rather substantial. Revenue from taxes in the financial services industry comes in at over £60 billion a year, with about a quarter of that being generated by foreign banks in Britain. These banks have remained in UK because they were granted an ‘EU Passport’ enabling them to sell their services to other countries in the region without prohibitions. It is not certain what the outcome of the talks would yield, but anything short of a continuation would mean a departure from London for a good number of foreign banks. Local banks may also consider leaving, which would be a further blow to the country, not just in terms of lost revenue, but unemployment. Lloyd’s of London has already declared that it would move some of its operations to Europe if talks prove unproductive. While banks are pushing for bilateral agreements in line with what is currently available, realistically, Browne hopes that both sides of the table are at least willing to make it beneficial for all parties involved.