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City urges May to hurry up on Brexit transition deal as Britain loses jobs

British Prime Minister Theresa May speaks during a media conference at an EU summit in Brussels  - AP
British Prime Minister Theresa May speaks during a media conference at an EU summit in Brussels - AP

The City's top lobby group has urged Theresa May to get a move on with a Brexit transition deal as she prepares for a landmark speech in Italy tomorrow. 

Echoing a warning made by the head of the Financial Conduct Authority earlier this year, TheCityUK has slammed the lack of progress made on agreeing a transitional arrangement since the EU referendum and called for urgent action to limit damage to the City. 

"For our industry, this really is crunch time," said chief executive Miles Celic. "Many firms are already moving parts of their operations out of the UK and Europe. When they’ve gone, it's hard to see them coming back." 

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Sounding his warning a day before Mrs May is set to unveil details about the future relationship she wants with the EU in Florence, Mr Celic added that damage to the City could be slowed by a clear, legally-binding transition deal resembling "the status quo as closely as possible" but pointed out that some harm was irreversible. 

"It's too late to plug it [the exits], people are already moving – it's now a case of slowing it down," he added. "In an ideal world it would be brilliant if people could press the pause button, but we've gone beyond that." 

He is the latest senior executive to push for a clear transition period so that financial institutions aren't left facing a cliff-edge switch when the negotiation period ends in March 2019.  The lack of clarity has already forced some City firms to implement their Brexit contingency plans, assuming a hard Brexit. 

"Florence was once a powerful European financial centre, but lost its position as other better-connected centres arose elsewhere," said Mr Celic. "We don’t want to see the same thing happen to the UK, or indeed to Europe as a whole." 

Florence will host Theresa May's key Brexit speech  - Credit: CREDIT: REX
Florence will host Theresa May's key Brexit speech Credit: CREDIT: REX

The main concern for the financial services industry is that the thousands of UK-registered firms currently relying on passports to service clients in the EU and vice versa lose that right with no time to adjust. With no clear agreement in place, big banks, insurers and asset managers have been forced to set up EU hubs. 

Large banks in particular cannot afford to take a wait-and-see approach to how the Brexit will negotiations play out, with consultancy firm Oliver Wyman noting earlier this year that Britain could lose 40,000 sales, trading and investment banking jobs as a result of of the exit.

The policy chairman of the City of London Corporation, Catherine McGuinness, echoed concerns, saying "we urgently need transitional arrangements to be agreed, a clearer idea how the UK can continue to trade post-Brexit and what future immigration policies might be". 

However, a government spokesman said: "We have been clear that we believe a time-limited, implementation period is in the interests of both the UK and the EU and that negotiations on the future partnership should begin as soon as possible.

"We have intensified our engagement with the business community to ensure their voice is heard and reflected throughout our negotiations giving them as much certainty as possible as we move through the exit process."

The City's warning comes a day after MPs said they had launched an inquiry into how Brexit was impacting British businesses, concentrating on the food and drink, automotive, pharmaceuticals and areospace sectors. 

The Business, Energy and Industrial Strategy committee, chaired by Rachel Reeves MP, said yesterday that it will look at a range of issues relating to market access, non-tariff barriers, regulation, skills, trade opportunities and transitional arrangements. 

"Brexit represents the biggest change for British business in the last 40 years. I want Brexit to work for business," Ms Reeves said. "It’s vital that the voices of employers and employees are clearly heard during the negotiating process; and that the Government listens."

Mrs May's long-anticipated Florence speech is seen as her most important explanation of her Brexit plans since her Lancaster House speech nine months ago

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