Development of London’s financial centre will “stall” owing to Brexit, but is unlikely to “totally reverse”, Goldman Sachs chief executive Lloyd Blankfein said on Friday. “It will stall, it might backtrack a bit, it just depends on a lot of things about which we are uncertain, and I know there isn’t certainty at the moment,” the head of the US investment banking giant told the BBC.
“I don’t think it will totally reverse,” said Blankfein. The British government will soon start negotiations to set the terms of its departure from the European Union.
Britain plans to leave the single market but hopes to agree a trade deal, and protecting its crucial financial sector is a main priority. UK-based banks and other financial firms face losing “passporting” rights to sell services to clients operating in the European Union once Britain officially quits the EU in March 2019 unless a deal can be reached.
Blankfein said the bank was “trying to avoid” a large-scale move out of London. “Obviously, a lot of people elect to have their European business concentrated in a single place, and the easiest place, certainly, for the biggest economy in the world (the US) to concentrate would be the UK — the culture, the language, the special relationship — and we are an example of that,” he said.
However, the bank would have to reconsider if unable to sell services on the continent. “If you cannot benefit from access to the EU from the UK, and nobody knows what those rules and determinations will be, then the risk is there will be some adjustment that will cause some people to have a smaller footprint in the UK.”
A number of banks have already announced plans to shift a few thousand jobs from London to other European financial centres such as Frankfurt, Dublin, Luxembourg and Paris. Goldman Sachs has already said that it will create hundreds of positions elsewhere in Europe. Britain’s finance sector employs 2.2 million people in the UK, seven percent of the country’s entire workforce. London’s financial sector alone employs 750,000 workers is home to many of the world’s top banks.
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