Mark Boleat, policy chairman of the City of London Corporation, said there was ‘nervousness’ about a potential ‘cliff-edge’ scenario that would leave UK-based firms left stranded in a ‘regulatory no-mans’ land’.
But he added: ‘I have no doubt that whatever happens in 2017, the City of London will remain the world’s leading financial centre.’
And he said business uncertainty could be soothed if ministers agree a transitional deal with the EU that sets out the terms of trade in the immediate aftermath of Brexit from 2019.
Mark Boleat, pictured, policy chairman of the City of London Corporation, said business uncertainty can be overcome if Theresa May agrees a transitional deal with the EU
His comments defy doom-laden warnings by Remain supporters who say anything other than a ‘soft’ Brexit – which would see Britain stay in the single market and tied to EU free movement rules – would severely damage the economy and push firms abroad.
Mr Boleat’s comments also defy concerns that Britain’s major banks could relocate to the continent to keep EU passporting rights, which give UK banks, insurers and asset managers the right to sell their services freely across the rest of the EU.
Lobbying group City UK warned 70,000 jobs in the City could be lost after Brexit if UK-based firms were denied the financial passports to trade in European financial markets.
The leading financier urged ministers to secure a transitional deal as soon as possible when Brexit negotiations get under way after March.
Chancellor Philip Hammond backs the idea of an interim arrangement on EU-UK trade as a permanent deal with Brussels is unlikely to be agreed within the two-year time-frame for Brexit negotiations.
Tory MP Steve Baker, left, said he had spoken to City figures who say there is ‘no danger’ of London losing its status as Europe’s financial hub while former Cabinet minister John Redwood, right, said fears of major job losses in the City after Brexit were ‘exaggerated’
And Theresa May signalled she is behind the move too after acknowledging there were concerns about a ‘cliff-edge’ after Britain cuts ties with the EU.
But Eurosceptics fear that a transitional deal will effectively keep Britain tied to EU institutions and immigration rules for years as pro-Remain firms, civil servants and Brussels officials seek to frustrate the Brexit process.
Mr Boleat told the Financial Times: ‘Firms’ nervousness can only be allayed if they know how they can continue running their business.
‘Important strategic business decisions are being delayed and much-needed investment postponed or withdrawn altogether.’
His comments bolstered pro-Brexit Tory MPs who have argued that London’s reputation as a global financial hub will remain intact after we leave the EU.
Steve Baker, Tory MP for Wycombe, said: ‘What I’m hearing is that there is no danger of London losing its status as Europe’s premier financial centre.’
And former Cabinet minister John Redwood said: ‘I think people are exaggerating the risks here. I don’t think the estimates of job losses are well based; I don’t think people can back them up — they are unduly pessimistic.’
WHAT WOULD A TRANSITIONAL DEAL LOOK LIKE?
Businesses fear being left stranded in a ‘regulatory no-mans land’ after Britain leaves the EU in spring 2019.
With a permanent deal on EU-UK trade unlikely to be agreed within the two-year time-frame, there are growing calls for the Government to seek a temporary transitional deal that sets out the terms of trade for businesses for the interim period and gives UK firms a cushion against the impact of Brexit.
A transitional deal with the EU could take several forms but would almost certainly require Britain to continue contributing into the EU’s budget.
The most likely scenario would see Britain remain in the European Economic Area, which allows non-EU countries in Europe to partake in the free movement of people, goods, services and capital across the single market.
But this would require Britain to continue paying budget contributions, accept unlimited EU migration and comply with EU regulations.
And with experts warning that it could take at least five years for Britain to agree a permanent deal with the EU, it would effectively mean Brexit wouldn’t be implemented until 2024 at the earliest.
It would give businesses relief from the uncertainty of falling off a ‘cliff-edge’ but Brexiteers would accuse the Government of betraying June’s referendum vote.
If no transitional deal is reached, EU-UK trade will default to World Trade Organisation rules, which are seen as the most basic trading terms and the ones used for Russia’s trading relationship with Brussels.
Another scenario would see Britain emulate Norway by remaining a member of the single market.
Norway enjoys the benefits of membership without the same extent of interference from Brussels but must also accept freedom of movement and pay substantial contributions and without having a say on rules and future free trade agreements with other nations.
But if no transitional deal is reached, EU-UK trade will default to World Trade Organisation rules, which are seen as the most basic trading terms and the ones used for Russia’s trading relationship with Brussels.It would give businesses relief from the uncertainty of falling off a ‘cliff-edge’ but Brexiteers would accuse the Government of betraying June’s referendum vote.
This could see tariffs as high as 10 per cent slapped on goods and services traded between Britain and Europe and British firms would lose all preferential access to the single market.