Maltese leader sees accord between Britain and EU on post-Brexit services trade

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LONDON, March 12 (Reuters) - The biggest risk to Britain's post-Brexit economy is a disruption to trade in services, Maltese Prime Minister Joseph Muscat said on Monday, but he thought London and Brussels would reach agreement on the issue.

Muscat said he feared leaving the EU single market would reduce Britain's comparative advantage in services although he said predictions of a mass exodus from the City of London (LSE: CIN.L - news) after Brexit were overdone.

"I do think that the predictions of mass relocations from the City and other places are being grossly overestimated," he added.

"The UK's basic attractiveness, coupled with decades of long embededness of investments - and the mere thought that Brexit might not happen or will be reversed in the next two decades - are, in my opinion, underestimated."

He expected London and Brussels would find a solution on trade in services post-Brexit.

"I think there will be concessions from both sides, but from the European side, I don't see concessions when it comes to points of principle, such as jurisdiction," he told reporters on a visit to London.

"I see that as a very big, bold and bright red line from the European side," he added.

(Reporting by William James; editing by Stephen Addison)