‘No terminal damage’ of the City because of Brexit, says Barclays boss John McFarlane | City A.M.
Barclays boss John McFarlane has struck a note of caution about the impact of Brexit on the City, saying he doesn’t believe it will cause “terminal damage”.
In an interview with Reuters, the chairman also known as ‘Mac the Knife’ shrugged off fears that the plan for the sector’s future trading relationship, revealed as part of the Brexit white paper earlier this month, would cripple job creation and trigger London’s rapid decline as a global financial services centre.
Dismissing concerns by some of his colleagues that moving away from mutual recognition is a mistake that could cost the City market access, McFarlane said: “I don’t think in the long run that there will be terminal damage [to London].
He pointed to the recent spike in Italy’s cost of borrowing as a timely reminder that the EU needs London’s markets as much as London needs the EU.
“The only reason that was dealt with is because London existed,” TheCityUK chair said. “Given that we have a competitive advantage in those areas that is not easily replicated, that is a fair argument for why people need to use this system going forward. Because it is better than the alternative”
However the government now needed to act fast to negotiate “expanded equivalence” for Britain after critics said the regime exposed firms to sudden loss of EU market access.
“You need to get on with it. Aggressively. Because radical change in this space is difficult,” he said.
His comments come as Bank of England deputy governor Sam Woods double-down on his estimate that the extent of City job losses would be not as bad as previously feared.
Woods told Bloomberg: “We have had an estimate for some time now of 5,000 to 10,000 jobs, which you can think of as half to one percent of jobs there are in this country in the relevant sector.
“So a relatively small move on Day One. I think it will be at the bottom end of that range. If anything, it might be slightly below that.”
Back in April Woods gave this same estimate to a group of MPs, saying there had been a “downwards drift” in his forecasts.
Yesterday City of London Corporation policy chief Catherine McGuinness told the same committee she believed there would be an initial reckoning of 3,500-12,000 job losses, although a bigger “Brexodus” may materialise in the longer term if a sufficient deal is not struck.