Accountancy firm EY has estimated that 83,000 jobs could be lost if euro-denominated clearing is forced away from London into continental Europe.
The report, which was commissioned by the London Stock Exchange (LSE) and has been circulated to politicians and the government, said the loss of clearing could also have a “significant domino effect”, hitting 232,000 jobs across the UK, not just in London.
Euro-denominated clearing has emerged as a battleground after the UK’s Brexit vote.
In September, chancellor Philip Hammond hit back at claims by French president Francois Hollande that euro clearing could move to continental financial centres after the vote.
“Most of the people that I am talking to do not believe that you can break off bits of the clearing system,” he said.
“Most of them do not believe that you could persuade clearing to go to any place where it doesn’t want naturally to go and that, actually, after London probably the most likely destination for clearing operations would be New York.”
He added: “Not Paris or Frankfurt or Dublin or Amsterdam, but New York. And that anything that split clearing up, or tried to force it relocate, would simply force up the cost of clearing with a huge cost to the European economy as a whole.”
The EY paper was first reported on by the FT. The LSE and EY declined to comment.
Earlier this month, LSE chief executive Xavier Rolet highlighted research showing that moving clearing away from London could cost banks $77bn in additional collateral.
The London Stock Exchange Group is the majority owner of LCH, which dominates the clearing of interest-rate swaps.
The $77bn figure is based on research by think tank Clarus, which has estimated that the move away from the UK would double collateral costs for banks.