City jobs exodus to the Continent is more a ripple than a wave

MPs were warned by HSBC’s former chairman Douglas Flint in 2017 that Brexit could trigger a “Jenga tower” of job losses, referring to the game where a whole tower of wooden blocks can topple down just by pulling just one piece out.

Xavier Rolet, then chief executive of the London Stock Exchange, told ministers he believed some 232,000 financial services roles were at risk.

Their aim was to pressure the Government into prioritising the finance industry during negotiations with Brussels. It did not work.

“We took a worst-case scenario, the most severe kind of Brexit, from the outset, which is what we have ended up with,” says an executive from a large US bank. “We didn’t want a worst case scenario but planned for it.”

Now that the City’s low expectations on Brexit have been met, most bankers have given up any hope of getting full access to EU financial markets. The UK has been stripped of its passporting rights, which gave full access to EU markets, and a feeling of apathy has swept through the Square Mile.

The European head of one US bank says: “I was upset by Brexit when it was going to cost me a lot of money. But now that I’ve spent it, I don’t really care.”

Yet there remains one key battle, in which Andrew Bailey, the Governor of the Bank of England, is said to have taken a special interest. How many City jobs really have to move to rival EU hubs due to Brexit?

Banking insiders say regulatory officials are asking questions about “how and where banks are booking trades, and why” amid fears an unnecessary number of staff are being pressured to move. On the face of it, Bailey doesn’t have too much to worry about. Flint and Rolet’s doomsday forecasts on job losses are yet to materialise. According to EY, only 7,600 financial services jobs have so far moved out of the UK due to Brexit. That’s a tiny proportion of jobs in the UK’s finance sector.

Yet Rolet sticks to his forecast. He still believes that 232,000 roles could go, based on research conducted by EY and commissioned by the LSE, if the UK loses its grip on the lucrative clearing market.