Brexit could cost the UK financial services £38bn if the country leaves the single market, a report commissioned by a City lobbying group has revealed.
Consultancy Oliver Wyman, commissioned by think tank TheCityUK, said if the result of negotiations will lead to a ‘hard Brexit’, meaning the UK will have trade restrictions with the EU, 35,000 financial services jobs would be at risk, and lose £5bn in tax revenues.
The report also estimates that a further 40,000 jobs and £5bn in tax revenues would be affected in the business ecosystem around financial services.
This week UK prime minister Theresa May has promised she will trigger Article 50 by the end of March signalling the beginning of the negotiation process for the UK to formally leave the EU.
If the UK remains in the single market, in a so-called ‘soft Brexit’, it risks losing £500m a year in taxes and 4,000 jobs, the report says.
Investment Association chief executive Chris Cummings says Oliver Wyman’s report is an “important reminder” of the contribution of the financial sector to the UK economy, but not only in terms of taxes and employment.
He says:”Beyond the direct contribution, the financial sector plays a key role in helping millions of UK citizens save for the long term and in funding British businesses as they invest and grow.
“The asset management industry acts as the ‘engine’ for savings of millions of UK households, providing long-term investment so that people can aspire to a comfortable retirement, a new home or paying for higher education. 75 per cent of all UK households have pensions that rely on asset managers to deliver investment returns.”
Whether in the single market or not, Cummings says the UK asset management industry will continue to be “a unique global investment industry”.