London mayor Sadiq Khan says hard Brexit won't benefit Europe as banks would move to New York, Hong Kong and Singapore

Rebecca Smith
Sadiq Khan has warned Europeans that a hard Brexit won't benefit them
Sadiq Khan has warned Europeans that a hard Brexit won't benefit them (Source: Getty)

Sadiq Khan has warned his European counterparts that a hard Brexit wouldn't be beneficial to them, as banks would move to New York and Hong Kong, rather than Paris and Frankfurt.

"The point I make to my colleagues across Europe is don't assume so-called 'hard Brexit' benefits you," he said, giving evidence to parliament's Brexit select committee on the UK's negotiating objectives this morning.

Read more: Khan calls on May to prioritise a Brexit interim deal

Because if there is so-called hard Brexit, some of these banks, financial institutions, won't go to Paris, Madrid, Brussels, Frankfurt, love them as we do.

"They'll go to New York, Hong Kong, Singapore, Dubai, so so-called hard Brexit doesn't benefit you, our European friends, or I would say London or the UK," the mayor said.

When asked about the government's comments that no deal would be better than a bad deal, Khan said: "When the Prime Minister talked about no deal being better than a bad deal, of course there are circumstances when that’s the case.

"If for example, a bad deal was us paying a massive cheque and all the rest of it without the right benefits to us, that’s a bad deal, no deal would be better."

The mayor stressed though, that in most circumstances, no deal would mean World Trade Organisation (WTO) terms.

That will involve "tariffs for goods, non-tariff barriers in relation to regulation, legal frameworks for services", Khan noted. "Bearing in mind we have a service surplus and when you speak to the service sector in particular, no deal equates to WTO terms equals catastrophe as far as they’re concerned."

A key priority for London businesses, Khan has found, is the desire for an "interim deal" to give them guidance for the future.

The mayor said he'd had conversations in private with some in the financial sector "who are worried" in the absence of certainty from the government.

Read more: Here's what MPs had to say after the Lords gave the green light on Brexit

"The good news is what people feared before 23 June should the vote go 'the wrong way' hasn't happened," Khan said. "The bad news is, already in the public domain are some of the decisions taken by financial institutions, whether it's UBS talking about 1,000 of their 5,000 employees leaving London; whether it's JP Morgan. JP Morgan employs 16,000 staff in the UK, they've talked about moving 4,000 out of the country."

In a formal response to the government's Brexit white paper, Khan has called on May to avoid uncertainty over a potential “cliff edge” and reassure firms that a plan is in place to avoid an immediate switch to WTO default trade rules if negotiations overrun.

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