John Glen told lawmakers that he agreed with Bank of England estimates that 5,000 financial services jobs will have moved to continental Europe by the time Britain is due to leave the EU next March.

“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,” Glen told a committee in parliament’s House of Lords. 

“We have not seen wholesale moves of large institutions to other cities in continental Europe,” Glen said.

He “fully expects” that Britain and the EU will agree on a deal that would introduce a transition period from next March to avoid a disorderly Brexit.

“If there was an unsatisfactory environment for the City of London then we would need to take appropriate action to defend our interests,” Glen said.

A no-deal Brexit, however, might not necessarily be as hostile and difficult as some might anticipate, he added.

Britain’s financial sector generates more than 70 billion pounds ($92 billion) in tax revenues, with the EU its biggest single export market.

Glen said the focus was on securing a bilateral agreement with the EU to inject certainty into the bloc’s existing system of financial market access known as equivalence.

Equivalence refers to Brussels granting market access to foreign banks and insurers if their home rules are aligned enough with those in force in the bloc.

BILATERAL AGREEMENT
Britain, however, wants a bilateral agreement with the EU to avoid Brussels scrapping equivalence at short notice, Glen said.

“We cannot be subject to a situation where there is politicization of equivalence and our financial institutions would be vulnerable,” Glen said.

UK and EU financial rules are already fully aligned and a bilateral agreement would set out what happens if either side wanted to diverge from a particular rule, he added.

“We need an outcome that satisfies the City.”

While many firms are yet to make firm commitments to move staff, they are negotiating options on space in Amsterdam, Paris, Frankfurt and Dublin that will allow them to quickly scale up, said Sophie Van Oosterom, chief investment officer for commercial real estate and investment firm CBRE in EMEA.

“We see some tenants putting options on space in other markets,” Van Oosterom told Reuters at the Expo Real meeting in Munich, adding this was for typically space for between 20 and 40 employees.

“So if there is a soft Brexit they will stay put and if something dramatic happens they can flick the switch. They are taking optional space that doesn’t cost them too much, but gives them the ability to grow quickly,” she said.

David Hutchings, head of Cushman & Wakefield’s European investment strategy team, said London had been losing some back-office finance jobs to other regions in Britain before the Brexit vote and those jobs may now go elsewhere in the EU.

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