BIG BANKS EXPECT TO LOSE 35,000 JOBS IN THE CITY

Bloomberg (HERE) is reporting that CityUk, a lobbying group for many of London's financial institutions, are suggesting 35,000 jobs could be lost with most going either to Dublin or Frankfurt. With a hard brexit coming up this looks like a certainty.

BAD NEWS BEGINS TO EMERGE

The banks are now convince we will lose access to the single market and are said to be accelerating plans to pull staff out of London (HERE). With the legal judgement coming tomorrow the government are said to have prepared four different versions of the Article 50 bill, depending on what the Supreme Court says (HERE) although the Telegraph thinks it is "in the balance". We shall see.

Northern Ireland's exit from the EU will destroy the peace deal. Apparently the Good Friday agreement gives people in the north rights to Irish citizenship and this will be difficult if not impossible to continue to have effect (HERE).

Meanwhile a cross party group of MPs are trying to block plans for what they call a hard brexit (HERE).  The BBC have a report about the difficulty under WTO rules to have what the PM describes as "sectoral deals" since and free trade agreement has to cover "all or substantially all" trade between two countries (HERE) and finally, retail sales took a nose dive in December (HERE). Since consumer spending is what is keeping the economy going these are dangerous times.

Prosper like never before!

"DOOM MONGERS" PROVED RIGHT?

It looks like the so-called doom mongers are going to be proved correct. Only the timing seems to have been wrong (HERE). Simon Jenkins says any fool can predict rain, it takes a genius to predict when it will fall.

People moving house is at the lowest for five years (HERE). With banks moving out (HERE), Toyota suggesting they are looking at how they can survive in the UK, retail sales down (HERE) and inflation rising, it all looks more or less as predicted albeit a bit delayed. 

BANKS ANNOUNCE MOVES

Banks are now beginning to announce staff transfers into the EU (HERE). While this will not result in London losing its status as Europe's leading financial centre, it will weaken it and strengthen Frankfurt and Paris. Tax revenue from these highly paid jobs will go to exchequers in Europe and not to The Treasury. So, we will lose.

And while only a couple of banks have said they will mover operations so far, Goldman Sachs are considering moving 3000 jobs to Frankfurt  (HERE) and others are bound to follow. I wonder if brexiteers can see writing beginning to appear on the wall.

Update: Poland is trying to attract 30,000 jobs away from the UK after brexit (HERE).

LLOYDS BANK TO SET UP UNIT IN THE EU

After Lloyds of London insurance brokers we now learn that Lloyds banks is to create a separate unit somewhere in the EU in order to maintain access to the single market (HERE).  I think we can take it as read that they won't be the last.

The London-based lender is targeting either Germany or the Netherlands for the unit, according to the Financial Times.  It is this sort of news that might, just might start some people beginning to realise that brexit holds no good news for our future and they may think again about leaving.

CHRISTMAS SUMMARY

There was a bit of good news (apparently) just before Christmas with newspaper polls in the West Midlands and Sunderland (HERE) showing a huge swing to remain. They were dismissed as unscientific but at least they don't show a swing to leave!

The Independent claimed, after an interview with the head of the Irish agency trying to attract businesses to Ireland, that more than 100 companies are enquiring into a move and "dozens" of them are actually planning to relocate (HERE).

Roger Bootle of Capital Economics says pundits need to eat some humble pie over Christmas (HERE) but I hope that one day we will be able to ask him to eat all of it.  Mrs May in her Xmas message has urged everybody to unite behind brexit (HERE) but I think she seriously underestimates the depth of pro-European feeling.  We are not going to become believers in brexit - ever.

And finally Mervyn King, former BoE governor has once again shown he is not an economist and has no idea how the British economy works, says we should be optimistic about brexit and we should leave both the single market and the customs union (HERE). Some people are born fools.

PRODUCTIVITY IN LONDON DOUBLE THAT OF THE UK

To underline the potential cost to the UK of losing any of the London financial services businesses it is being reported (HERE) that output per person (i.e. productivity) in London is twice that of the rest of the UK. Much of this is in the many huge financial organisations based in The City.

We can ill afford to lose any of these revenue raising businesses when our productivity across the country is about 30% less than our competitors.

Prosper like never before.

JAPANESE BANKS WORRIED ABOUT BREXIT

Phillip Hammond has been in Japan trying to reassure banks there that London will get "the best possible access" to the EU (HERE).  I wonder how he explained that Lloyds of London the insurance business that has been based in The City for 328 years is moving part of its operations to the EU in order to protect the 11% of its market that comes from the EU (see HERE).

It might be a case of look what we do not what we say for the Japanese.

Update: It has emerged, according to The Independent, that the japanese warned Mr Hammond that they would begin to leave the UK in 6 months (HERE) unless they get clarity on access to the EU market.

FINANCE JOBS AT RISK

The Guardian (HERE) are claiming that the House of Lords report (see HERE) on the financial sector has been told up to 200,000 jobs in the city are at risk from brexit.  Banks and other financial institutions have told the committee producing the report that unless there is some clarity they will need to begin planning to relocate some parts of their businesses to mainland Europe or Ireland.

They are concerned that the licenses needed take 18-24 months normally and if there are a lot of organisations applying at the same time this will be delayed and they will be left unable to trade.

BANKS LIKELY TO BEGIN RELOCATION NEXT YEAR

The BBC have carried out an investigation into all the talk of banks and financial institutions moving some operations into the EU in order to continue trading inside the single market. Newsnight had the report last night including an interview with the a French financial regulator.  The BBC news website has the story (HERE).

Of course this is something the brexiteers told us would never happen. Well now it seems it might.

The regulator says he is in advanced discussions with "large international banks" about moving to Paris including due diligence work. He says many other companies had made informal enquiries and he thought the same things were happening in up to eight other European financial centres. This is not to say everyone will move or even that those who do will move everything, but the sector produced £71.4 billion for the exchequer in 2015-16 (HERE) so even a 10% drop in revenues is going to be painful. 

TAX REVENUE FROM FINANCIAL SECTOR

Reuters are reporting that the financial services sector paid £71.4 billion in taxes in 2015/16 (HERE). This is a huge amount of money and some of it at least is at risk from brexit. 

If we lose passporting rights into the EU many companies will relocate some staff to the EU and we will lose revenue.  Brexiteers think any losses will be more than made up elsewhere but it is a gamble and the Reuters report shows just how big a gamble it is.

BANKS PREPARING TO MOVE OUT OF UK

U.S. bank Citi is preparing to move up to 900 jobs from London to Dublin as part of its contingency plans for Britain's exit from the European Union, the Sunday Times reported (HERE). This should come as no surprise given the lack of clarity in government planning.

At the same time the RBS chairman, Sir Howard Davies, is pleading for some sort of transitional arrangement after we leave (HERE) and says banks are not going to wait to see the government's full negotiating position and will mover before this happens.

And of course, we won't even know if a transitional deal is on offer until after Article 50 is triggered. This would be like jumping out of an aircraft without knowing for sure if you have a parachute.

J P MORGAN NOW IN DOWNING STREET

One of Wall Street's top bankers has urged ‎Philip Hammond to ensure a long transition period for the UK's exit from the European Union amid warnings about "cliff-edge" disruption to financial markets (HERE).

Sky News has revealed that Jamie Dimon, the chairman and chief executive of JP Morgan, met ‎the Chancellor in Downing Street on Thursday, months after warning that Brexit could force him to move up to 4,000 jobs out of the UK. One wonders which company is going to be next for support and reassurance!

LOSS OF EURO CLEARING WILL COST BANKS $77 BILLION

The CEO of the London Stock Exchange has said banks will have to find an extra $77 Billion in additional collateral (HERE) if Euro clearing is lost as seems almost certain to happen. 

Xavier Rolet said, “It will never come back to London, if the clearing operations are removed, what is most likely is that it will be New York that will benefit the most". 

J P MORGAN NOW IN DOWNING STREET

One of Wall Street's top bankers has urged ‎Philip Hammond to ensure a long transition period for the UK's exit from the European Union amid warnings about "cliff-edge" disruption to financial markets (HERE).

Sky News has revealed that Jamie Dimon, the chairman and chief executive of JP Morgan, met ‎the Chancellor in Downing Street on Thursday (10th November) months after warning that Brexit could force him to move up to 4,000 jobs out of the UK.

One wonders which company is next!

BANKS PREPARE TO RELOCATE

Anthony Browne, head of the British Bankers’ Association, claims (HERE) that some smaller banks are preparing to relocate into Europe before the end of this year, with larger banks set to follow in the first quarter of next year. If anyone is in a position to know it must be Mr Browne.

He puts this down to uncertainty over Brexit and also says the equivalence regime is no substitute for passporting rights, no matter what the Brexiteers say.

Bloomberg are reporting in today's newsletter that a property company managed by Schroders Plc is bidding for an office building in Frankfurt, joining CBRE Global Investors LLC and Standard Life Plc, which are seeking to purchase office space in cities from Dublin to Amsterdam.

BANKS COME BACK INTO THE FRAY

The banks have this week come back into focus, firstly with this article in The Telegraph (HERE) suggesting that New York may gain at London's expense over Brexit.

Then the French minister of finance Michel Sapin said he had been told directly by some US banks that it was not a question of IF they move some functions to the EU but WHEN (HERE).  The Telegraph even claims it is already beginning to happen (HERE) but it isn't noticeable because rather than people moving, it is the jobs that are going.  Work that would have been done in London is moving into the EU.

There is some irony here since The Telegraph told us in March that there wouldn't be an exodus of banking jobs after Brexit (HERE).

Also the chancellor has been saying the EU shouldn't shoot itself in the foot by damaging London since this wouldn't help European companies but Bloomberg has an article (HERE) saying London isn't that important to the EU.

“There are vested interests and people saying this for British interest,” said Karim Hajjar, chief financial officer of Brussels-based chemicals maker Solvay SA. “Skills are easily moved. If London can’t offer the platform, it can be recreated pretty quickly.”

Stefan Kraus, a London-based partner at German law firm Luther, whose clients include Bayer AG, Deutsche Telekom AG and Infineon Technologies AG, said the U.K. bankers’ and officials’ warnings sounded hollow, given that there are no rules barring EU companies from raising money via banks outside the bloc.

“It looks a bit like wishful thinking in the search for arguments,” Kraus said.

THE POUND CONTINUES TO FALL

Gerald Lyons, the former advisor to Boris Johnson, was on Radio 4 this morning saying the slump in the value of the pound would have happened anyway regardless of the referendum result. He joined David Davis and Mervyn King (HERE) and others in welcoming Sterling's decline in value. The Telegraph also says the fall is overdue (HERE).

This is going to push up the cost of imports and make our current account deficit even worse. Exports become cheaper but whether this will have a significant impact is debatable.  It is all beginning to look like the politicians have started something that they may find hard to stop.

Sterling is trading well below $1.23 this morning and shoppers are being warned of price rises to come (HERE).

FINANCE JOBS WILL GO WHATEVER THE DEAL

The UK head of U.S. bank Citi said on Monday last week that jobs in London's financial sector would move to countries inside the European Union after Britain leaves the bloc, regardless of what deal is struck on access to the EU financial services market (HERE).

This on the basis that no economic bloc is going to allow its financial services to be supplied and dominated by a third country.  No matter what the deal, the EU will want to see most financial services moved inside the bloc where they can be regulated by the bloc. It makes perfect sense to me.

POUND HITS RECORD LOW

The Telegraph (HERE) is reporting the pound trading at a record low on a trade weighted basis (against the currencies of our main trading partners). The text gives an explanation but things are getting even worse.  

Today the pound was trading at $1.22!  If interest rates have to rise to counter the slump God help us!

Amazingly the ex boss of HSBC and an enthusiastic Brexiter  Mr XXX says it's nothing to do with Brexit (HERE) and more to do with our lack of competitiveness!!  Did he think the slump in sterling on 24th June was a coincidence?  This is the shape of things to come. Brexiters are going to deny every piece of bad economic news is in any way connected with Brexit.  

He admits we haven't exported enough since 1997 (and well before this in my opinion) and the Mail reports Liam Fox (HERE) saying we need to export more to exploit glorious joy of free trade!!! It would have been wiser to address the deep seated problems of a lack of export competitiveness then go the Brexit - but no they've chosen to do it the other way round.