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Brexit 'cannot possibly be positive' for UK, JP Morgan chief says

Lucy Burton
·3-min read
Jamie Dimon
Jamie Dimon

JP Morgan boss Jamie Dimon has warned that he could shift all bankers serving European Union clients out of London as regulators on the Continent seek to steal the City's business.

In his annual letter to shareholders, the US bank chief said that Brexit "cannot possibly" boost the UK economy and warned of mass job moves as Brussels seeks to exclude London from its markets.

Mr Dimon - a vocal backer of Remain before the referendum - suggested that the UK would in future be forced to follow the EU's agenda.

He said: "Brexit was accomplished, but many issues still need to be negotiated. And in those negotiations, Europe has had, and will continue to have, the upper hand.

"In the short run (ie the next few years), this cannot possibly be a positive for the UK's GDP – the effect after that will be completely based upon whether the UK has a comprehensive and well-executed strategic plan that is acceptable to Europe."

Mr Dimon has long been critical of Brexit, which led to the loss of so-called passporting rights that allowed London-based bankers to deal freely with firms on the Continent.

EU vs the City | Wars of equivalence
EU vs the City | Wars of equivalence

He said in the run-up to the 2016 vote that JP Morgan could axe up to 4,000 UK jobs if Leave won, but the lender later scaled back these estimates and said no more than 500 to 1,000 roles would move abroad.

Mr Dimon's latest broadside comes as the Bank of England seeks to head off a power grab from the EU. Governor Andrew Bailey warned in February there were signs the bloc could be planning "to cut the UK off from itself".

In his letter, Mr Dimon said: "It is clear that, over time, European politicians and regulators will make many understandable demands to move functions into European jurisdictions.

"Because of this - and because of strong European efforts to compete with London - Paris, Frankfurt, Dublin and Amsterdam will grow in importance."

He added that London could still thrive by seizing the initiative in areas such as online banking. JP Morgan has hired hundreds of British workers in the past few months as it seeks to take on the likes of Monzo by targeting UK households with its own online bank later this year.

Mr Dimon said: "We may reach a tipping point many years out when it may make sense to move all functions that service Europe out of the United Kingdom and into continental Europe.

"But London still has the opportunity to adapt and reinvent itself, particularly as the digital landscape continues to revolutionise financial services."

Banking insiders say regulators on both sides of the Channel have been asking how and where banks are booking trades in the past few weeks, as foreign rivals pile pressure on firms to move staff from London and British regulators try to defend the City.

City Intelligence newsletter (SUBSCRIBER) Article
City Intelligence newsletter (SUBSCRIBER) Article

According to EY, only 7,600 financial services jobs have so far moved out of the UK due to Brexit, a tiny proportion of roles in the UK’s finance sector and far less than previously predicted.

Xavier Rolet, the former boss of the London Stock Exchange, said at the weekend that he still believes research which it commissioned in 2016 that suggested 232,000 roles could go.

Mr Dimon - who has run JP Morgan since 2005 and is the last boss standing at a major Wall Street lender from before the 2008 financial crisis - also predicted a US boom and compared the bank to a "local bakery" in his letter.

The banker, who was paid $31.5m (£27.7m) last year, said: "When JP Morgan Chase enters a community, we take great pride in being a responsible citizen at the local level – just like the local bakery."

In the 68-page letter he also said America had been "torn and crippled by politics, as well as racial and income inequality".

Mr Dimon predicted a boom for the US economy due to excess savings, a successful vaccine rollout and "euphoria around the end of the pandemic", which he said could run into 2023.