Yahoo Finance Hard Brexit would damage us, warn EU's corporate giants
A hard Brexit could jeopardise the City of London (LSE: CIN.L - news) 's financial services 'cluster', raising funding costs for companies across the European Union, some of the continent's biggest corporate names have warned.
Sky News has obtained a report produced by EY, the professional services firm, which reveals that companies such as Airbus and Volkswagen (LSE: 0P6N.L - news) are concerned that the potential fragmentation of UK-based finance could significantly increase their cost of funding.
The work was initially commissioned by the City of London Corporation but evolved into an independent project by EY's European operations.
Sent to policy-makers across the EU on Tuesday, it is thought to be the first substantive piece of research examining the anxieties of some of the EU's biggest companies about the possible ramifications of a hard Brexit.
Such a scenario could force the UK to surrender ambitions to retain any form of financial services passporting , leading it to seek inferior access to the EU single market.
:: London's future as financial centre in question
The EY study, marked 'confidential', has the title 'The value of the City of London cluster and the potential impacts of Brexit', and includes detailed responses from 15 big companies, among them Telefonica (LSE: 826858.L - news) , the owner of O2, and the Italian confectioner Ferrero.
Sources described it as an initial study that would be followed by wider research covering a larger number of EU-based companies.
While limited in its scope, the document reveals that most of the companies surveyed "have concerns that a hard Brexit may break a model that is perceived to be working well and adding tangible benefits, especially for capital-raising, borrowing and risk management".
In a speech on Tuesday night, Paul Manduca, chairman of the advisory board of TheCityUK, a lobbying group, was due to warn of the risks of an extreme version of Brexit.
While views in the City about the impact of leaving the EU are mixed, a number of large employers - including some of the Wall Street banks which helped to fund the Remain campaign before June's referendum - have warned that some jobs will leave the UK.
Last month, TheCityUK published a report by Oliver Wyman, the consulting firm, which concluded that tens of thousands of City-based jobs could be at risk , along with billions of pounds in tax revenue.
The EY study flags the benefits of the City as a cluster for the concentration of talent, globally recognised legal and regulatory frameworks and easy access to a wide range of connected services in a single location.
It also highlights warnings from unnamed academics that recreating the City's comprehensive hub for financial services in another location could take more than 20 years.
EU corporates believe a more fragmented model for access to financial services is likely to be the outcome of a hard Brexit, with delivery spread more broadly across cities such as Dublin, Frnakfurt, Luxembourg and Paris, the EY study says.
Neither EY nor the City of London Corporation would comment.
