As is probably appropriate for someone who has declared himself a “threat” to banks, which he accuses of being, “destructive”, “pernicious and undemocratic”, UK Labour leader Jeremy Corbyn’s speech on Brexit today offered little solace to anyone concerned that their banking job will move out of the UK after Brexit.
Corbyn’s speech was notable for its omission of any mention of the financial services sector which generates around £70bn of UK taxes annually. – In a nearly 5,000 word speech, his only reference to banking was in the context of market failure. “The free market has not worked in the banking sector. It has not worked in the water industry. It has not worked in the energy utilities. It has crashed in out-sourcing and it has failed our fragmented railways,” said Corbyn – thereby categorizing the banking industry with three other industries which the Labour party intends to nationalize if elected.
Finance professionals in the wealthy London borough of Kensington voted for Corbyn’s Labour Party in June 2017 in the hope of averting hard Brexit under the Conservative Party. While the Conservative government has reportedly told senior bankers it will put financial services at the heart of a new EU trade deal, however, Corbyn’s speech today implied that banks could be left in the cold if Labour is elected.
Corbyn used his speech to criticize the Conservative government for being overly, “concerned about cutting deals with each other and for their friends and funders in the City.” Instead, he said he plans to cut a Brexit deal that,”offers security to workers in the car industry worried about their future, hope to families struggling to pay the bills each month and opportunity to young people wanting a decent job and a home of their own.”
Corbyn’s emphasis on protecting manufacturing jobs was also reflected by Labour’s new support for remaining in a permanent customs union after Brexit takes place. In today’s speech, Corbyn mentioned the customs union seven times, whilst only fleetingly referencing the far broader single market (which he said vaguely that Labour wants to ,”maintain the benefits of.”) “The customs union is just about the trade in goods and not in services,” says the head of one financial services think tank in the City. “If the UK were to find itself in an EU customs union without a broader agreement on financial services, it would certainly have an impact on the banking industry in London.”
“Membership of a customs union in itself would do nothing to solve the problems facing the UK’s financial services industry after Brexit,” agrees Peter Bevan, global head of the financial regulation group at law firm Linklaters. “The financial services sector is more focussed on continuing access to the single market, or a licence to cover the provision of those services.”
Meanwhile, there are signs that some finance firms are going ahead with contingency plans. Goldman Sachs has begun making equity sales hires in Paris, for example, and Aberdeen Standard Investments has opened a new EU base in Dublin.
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