The UK’s financial services sector will gain an extra £12 billion a year in revenues as a result of the UK taking back control of regulation when it leaves the EU, according to a new report.
The report predicts that Brexit will “accelerate” the UK financial services sector by freeing it from stifling Brussels red tape.
The study, from the leading Brexit campaign group, Leave Means Leave, rejects Remain claims that Brexit will damage the City of London. It concludes that UK financial services, which support 2 million jobs across the country, will accelerate once Britain regains independence, not least because Eurozone states will be mired in increasingly desperate efforts to keep the euro afloat.
The report, ‘Why our financial services need a clean Brexit’, which includes a foreword by economist Dr Gerard Lyons, challenges doom-mongering claims from the Remain camp that the City will suffer from leaving the Single Market.
On the contrary, it says that escaping the “straitjacket” of burdensome and expensive EU rules will reinforce London’s dominant global pre-eminence.
It argues that the benefits of passporting are “overstated” as other tightly regulated markets outside the EU such as Singapore and the United States have clearance through MiFID regulation. The suggestion, therefore, that the UK would not strike a deal is “extraordinary”, as UK firms are already fully compliant with all EU law.
In contrast, if the EU fails to secure a deal on financial reciprocity, many firms in the remaining EU 27 will move departments to London as the UK has “the deepest most liquid capital market in Europe, and hence the lowest form of capital”.
It highlights the opportunities Brexit will bring the UK as it will regain the legal power to regulate financial services, including potential savings of 2-3 per cent of sector costs, which would be worth between £8-12 billion a year, and urges the City to “focus more on this potential now”.
The report lays bare the myth of the importance of the Single Market to UK trade as 59 per cent of UK financial sector exports are done outside the EU and exports to the rest of the world are growing much quicker than to the EU.
It forecasts that London’s dominant position will be boosted safeguarding the jobs of the 250,000 – 300,000 people directly employed in the ‘Square Mile’ while the EU will have to tackle the banking crisis and the very survival of the Euro.
It criticises the “burdensome” and “highly expensive” EU regulatory approach which fails to take into account national need.
It says that the only area of conformity in financial services is in product regulation through MiFID directives, which have been “inefficient and productivity and return sapping”.
It dismisses claims that 75,000 jobs are at risk, as the only way that would be possible is if all intra-EU trade from London collapsed. In reality, the biggest risk to the UK financial sector is remaining in the Single Market as the UK would take on all EU regulation without having a say in its framing.
The report concludes that “Leaving the Single Market will lighten regulation, enable more appropriate capital requirements and grow City and UK jobs, as happened when we did not join the Euro. That in turn will increase tax revenues, benefiting society as a whole.”
Commenting, Richard Tice, Co-Chair of Leave Means Leave said:
“As the world’s leading financial sector, the UK is facing a very promising and profitable future outside the EU.
“Being able to cut unnecessary regulation and bring back legal jurisdiction to the UK opens up a whole host of opportunity.
“The EU, on the other hand, faces a very difficult struggle ahead. It is essential that they secure a deal with the UK on financial reciprocity or they will see capital move from Frankfurt, Paris, Madrid to London.”