Britain is expected to lose around 5,000 City jobs by Brexit Day and could see its £72bn in annual taxes from the sector come under threat, the government has admitted.
Treasury minister John Glen told a House of Lords committee that he backed a previous prediction by the Bank of England that around 5,000 financial services jobs will have been shifted out of London by “Day One” on March 29.
But he said there were “so many caveats to this” and insisted the government “anticipates we will get a deal”.
Glen admitted that “uncertainty” was taking its toll on the sector, which risks firms quitting the City and could hit the Government’s £72.1bn in annual tax revenues from the financial services industry.
“That figure of £72.1 bn is necessary as we increase investment in public services and we need that money,” he warned.
But he said he was doing everything possible to ensure the City retained its place as one of the world’s key financial centres after the UK leaves the EU.
He told the Committee on EU Financial Affairs: “My sole objective in respect of the City is to ensure as much continuation as possible in respect of economic value able to be generated by the City.
“You’re right to say that I said on a number of occasions that I would do whatever it takes,” he added. “That means that we must have… an ambitious agenda for financial services.”
He said that so far the fears of the widespread jobs exodus had not come to pass, describing the situation as “stable” as firms put in place contingency plans for the worst case scenario.
The Bank of England took the City by surprise in July when it played down the financial services jobs move with its prediction that that 5,000 jobs or fewer would be lost by Day One.
But Glen batted away questions from the committee asking for an estimate on the jobs hit in the event of a no-deal Brexit, while also admitting that the government had not actually calculated how much of the sector’s tax revenues could be lost.
When accused of being “irresponsible” by the committee for failing to estimate the tax impact, Glen said: “We are not complacent about what we need to do to remain competitive.”
He added: “Uncertainty is undesirable and rarely has positive economic consequences.”
With fears over the impact on a raft of financial services products, Glen said he was “not flippant about the urgency” to secure clarity on Brexit.
Following the Bank of England’s warnings yesterday over the need for more EU action, Glen said the EU was “not yet” doing enough.
The Bank said the need for the EU to reciprocate with decisive action was now “pressing” as it cautioned £41 trillion of derivative products were under threat from a cliff-edge Brexit.
Glen said: “They [the EU] are taking significant risks for their own economies by not doing that.”
“We’re doing the right thing and we expect they will do the right thing as well when faced with, in the end, the economic consequences of not doing so.”