Financial sector calls un UK government to prioritise stopgap deal with Europe
London's powerhouse financial sector has called on the Government to prioritise a stopgap deal with Europe after Prime Minister Theresa May started the clock ticking on negotiations.
Mrs May sought to assure the UK would be looking for a "smooth and orderly exit", but City bosses and financial services groups said it was vital a transitional arrangement was agreed early in the two-year negotiations to prevent companies defecting to rival financial centres across the globe.
Mark Boleat, policy chairman of the City of London Corporation, said this would "provide clarity and reassurance to businesses and consumers".
He added: "This will guarantee continuity of cross border trade after the end of the Article 50 negotiation period and provide a bridge to the date when the new partnership agreement is ratified."
Andrew Kail, head of financial services at PricewaterhouseCoopers, warned it would take many financial services firms up to five years to adapt to the new trading rules.
He said: "It remains critically important that access to markets and customers is maintained both here and overseas.
"Inevitably the full transition to a new regime will take many financial services companies longer than two years, not least because of existing and emerging regulations.
"The scale and pace of change is unprecedented.
"Some firms have estimated the changes would normally require between three to five years."
Think tank TheCityUK and the Investment Association both said it was important for the UK to agree a "bespoke" deal with the EU.
Chris Cummings, chief executive of the Investment Association, said: "Achieving a post-Brexit deal that is mutually beneficial for the UK and the EU is key to our industry continuing to service its clients across the world.
"We need a bespoke agreement that hinges on mutual market access, access to global talent, legal certainty and preserving the entirety of the UK's financial services 'ecosystem'."
Miles Celic, chief executive of TheCityUK, added: "We have also consistently called for continued access to high quality talent from Europe and beyond, as well as appropriate bridging and adaptation periods as we leave the EU.
"It is good to see that the Prime Minister has underlined in her letter the importance of avoiding any cliff edge and minimising unnecessary disruption for customers in the UK and the EU."
But Mrs May cast further doubts over passporting rights, which allow financial firms to trade freely across the EU, as she said she "respects" the position of EU leaders that the UK cannot cherry pick what it wants.
She has already pledged to pull the UK out of the single market with a "bold and ambitious" free trade agreement.
Losing passporting rights could cost Britain's financial services sector £38 billion, deal a £10 billion blow to the Treasury's coffers and place 75,000 jobs in the firing line, according to think tank TheCityUK.
Banks have issued the lion's share of the warnings over job losses, claiming the loss of passporting rights would force them to set up new operations on the continent and migrate staff out of the capital.
US banking giant JP Morgan said 4,000 jobs would leave the UK, Goldman Sachs threatened to move 2,000 roles and HSBC said it would transfer 1,000 positions from London to Paris following the Brexit vote.