Wednesday

26th Apr 2017

IMF predicts 'pain' for UK, as banks prepare London exit

  • HSBC chief says some 20 percent of activities will leave London (Photo: Gyver Chang)

Brexit will not be “without pain”, said the head of the International Monetary Fund (IMF) Christine Lagarde on Wednesday (18 January), as more reports emerged of bank relocating jobs from London.

Lagarde welcomed UK prime minister Theresa May's speech on Tuesday, telling the BBC “less uncertainty is certainly better for the UK economy and for the rest of the European Union”.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

But she noted that the IMF still thinks the British exit from the EU “will not be positive all along and without pain”.

HSBC bank CEO Stuart Gulliver told Bloomberg on Wednesday that “irrespective of Brexit … London will remain a global financial centre”, but gave a quantification of the scale of bank activities that the bank will relocate elsewhere.

“Those activities covered specifically by European legislation will need to move. Looking at our own numbers, that's about 20 percent of the revenue,” said Gulliver, who heads the world's sixth-largest bank, headquartered in London.

Some 1,000 employees could be relocated to Paris.

The Goldman Sachs Group is reportedly also thinking of moving jobs out of the City.

According to German newspaper Handelsblatt, the world's 18th-largest bank is considering cutting the number of roughly 6,000 London-based jobs by half. Around 1,000 of those would be moved to Frankfurt, the German daily said.

Swiss bank UBS said about 1,000 of its 5,000 London-based employees could be affected, Reuters reported.

In the short term, however, the UK has posted some positive figures.

The BBC reported that unemployment was at its lowest level in more than a decade, with 52,000 people finding a job in the three months to November 2016.

The UK's unemployment rate stood at 4.8 percent, according to the Office for National Statistics.

But Dutch finance minister Jeroen Dijsselbloem, who chairs the influential meetings of eurozone finance ministers, said this would change in future.

He told NRC Handelsblad newspaper on Wednesday that he expected the so-called hard Brexit as outlined by May to lead to “massive unemployment” by 2037.

“Let's speak to each other again in 20 years, and then England will be back to where it was in the seventies,” said Dijsselbloem. “Totally outdated, massive unemployment, totally impoverished.”

Theresa May outlines 'hard Brexit'

The British prime minister confirms that the UK will leave the single market when it leaves the EU and will seek a new trade deal.

Juncker to visit May in London next week

The British prime minister invited the European Commission president for a discussion about the upcoming EU exit negotiations, while she prepares for general elections on 8 June with a "hard" Brexit agenda.

Column / Brexit Briefing

May's drive for one-party Brexit state

Snap election will kill off attempts to reopen debate on second referendum and inflict further damaged on confused opposition.

News in Brief

  1. EU parliament moves to lift Le Pen's immunity
  2. EU Commission launches probe into Hungary's university law
  3. Scots slowly losing appetite for independence - poll
  4. Council of Europe puts Turkey on watch list
  5. EU to put parental leave on political agenda
  6. Israel cancels German meeting over human rights groups
  7. Hungary's Orban will participate in EU parliament debate
  8. Malta floats cash-for-refugees plan

Stakeholders' Highlights

  1. UNICEFRace Against Time to Save Millions of Lives in Yemen
  2. Nordic Council of MinistersDeveloping Independent Russian-Language Media in the Baltic Countries
  3. Swedish EnterprisesReform of the European Electricity Market: Lessons from the Nordics, Brussels 2 May
  4. Malta EU 2017Green Light Given for New EU Regulation to Bolster External Border Checks
  5. Counter BalanceCall for EU Commission to Withdraw Support of Trans-Adriatic Pipeline
  6. ACCAEconomic Confidence at Highest Since 2015
  7. European Federation of Allergy and Airways60%-90% of Your Life Is Spent Indoors. How Does Poor Indoor Air Quality Affect You?
  8. European Gaming and Betting AssociationCJEU Confirms Obligation for a Transparent Licensing Process
  9. Nordic Council of MinistersNordic Region and the US: A Time of Warlike Rhetoric and Militarisation?
  10. European Free AllianceEFA MEPs Vote in Favor of European Parliament's Brexit Mandate
  11. Mission of China to the EUXinhua Insight: China to Open up Like Never Before
  12. World VisionViolence Becomes New Normal for Syrian Children

Latest News

  1. Brexit is about Europe's future as well
  2. Power struggle in Greenland: Three reasons why the EU should care
  3. Nordic and Baltic countries step up digitalisation efforts
  4. European states still top media freedom list
  5. Let’s not put European public health at risk
  6. Threatened Budapest university calls for EU support
  7. Orban set to face down EU threats
  8. Dont expect 'quick fix' in Syria, China tells EU