May tries to reassure City bankers over Brexit ‘cliff-edge’ fears

Theresa May has sought to reassure growing City anxiety about the impact of a "hard" Brexit, promising Wall Street bankers that she will seek to protect London’s crucial role as a global financial centre during negotiations with her European counterparts.

Sky News has learnt that the Prime Minister attended an event hosted by Morgan Stanley (Xetra: 885836 - news) on Wednesday night at which she made an explicit attempt to allay fears about a so-called "cliff-edge" at the point of the UK's departure from the European Union (EU).

Mrs May is said to have told the audience that she recognised the contribution made by Wall Street banks to the British economy - a remark interpreted by senior City figures as addressing concerns that she is lukewarm about the financial services sector.

The event, in central London, was attended by Morgan Stanley boss James Gorman, as well as prominent British businessmen including Douglas Flint, the HSBC chairman, and Martin Gilbert, chief executive of Aberdeen Asset Management (Frankfurt: 899502 - news) .

It comes just days before the PM is expected to trigger the Article 50 process that will culminate in the UK leaving the EU in 2019.

Mrs May had met with Mr Gorman, along with the heads of other US financial institutions, in Switzerland in January, since when their contingency planning ahead of Brexit has intensified.

A person who attended Wednesday's event said the Morgan Stanley boss had reiterated his desire for Brexit to prompt as few of the bank's employees to relocate from the UK as possible.

Morgan Stanley was among the major donors to Britain Stronger in Europe, the official campaign group for staying in the EU.

Wall Street banks have warned consistently that the loss of access to the EU's "passporting" regime, which enables firms to trade seamlessly across Europe's borders, would lead to them relocating jobs from London.

Recent reports suggested that Morgan Stanley planned to move roughly 300 London-based jobs to Dublin and Frankfurt.

A spokesman for the bank said last month: "Our focus is on ensuring that we can continue to service our clients whatever the Brexit outcome.

"Our strong franchise and material presence in Europe gives us many options, and we will adapt as the details of Brexit become clear. Given all of this, no decisions have yet been made."

The eventual outcome of banks' preparations will largely be determined by the scope and duration of any transitional deal enabling them to continue serving clients across European borders from the UK.

Mrs May has said that Brexit will entail the UK leaving both the EU single market and its customs union, prompting calls from business lobbying groups for a bespoke deal which protects the interests of key sectors.

Any explicit move to safeguard the City carries political risk for Mrs May, however, given the low public esteem in which parts of the financial services industry continues to be held.

Morgan Stanley and Downing Street spokesmen both declined to comment on Wednesday's event or Mrs May's remarks.