Theresa May met on Thursday with representatives of London’s financial behemoths – Goldman Sachs, HSBC, London Stock Exchange, etc. – to offer assurances for their future.
That was a tall order.
Earlier that day, London’s Mayor Sadiq Khan published a report that estimates the possible cost of Brexit to the tune of €56bn and 500,000 jobs by 2030. The release of the study comes only a month after Brexit Minister David Davies admitted that the government had not commissioned a similar study. And although the government has commissioned a number of impact assessments across many sectors, these will not be released to the parliament.
The scenario-based study was conducted by Cambridge Econometrics.
Looking at five different scenarios, analysts projected the possible results on nine key industries, including real estate, construction, hospitality, and finance. The worst case scenario envisions the failure to secure a two-year transition period, leading to a decade of growth stagnation and the loss of 87,000 jobs.
“No deal” would hit hard the financial and consulting industries, resulting in the loss of 119,000 jobs.
Earlier this week, the European Commission’s chief Brexit negotiator, Michel Barnier, reiterated that the City of London should not hope for a special passporting rights.
The Mayor of London told BBC Radio 4 that London was likely to withstand the crisis, due to its high-value jobs and diversified economy. Indeed, the study suggests that London’s economy would see its growth slowdown by 1.9% to 2.1%, compared to 3% to 3.3% nationwide. In this scheme, Khan suggests that the ensuing economic crisis would increase the economic gap between the capital and the rest of the country.
Trade negotiations between the UK and the EU are expected to resume in March, after the European Commission noted “sufficient progress” on three key issues: Northern Ireland, EU citizens, and the so-called “divorce bill.”