Over the past week various large banks, such as Goldman Sachs and Morgan Stanley, have warned that they may need to move thousands of jobs from the UK following the impact of Brexit.
In reality, international banks will not have to move thousands of jobs away from London and will still be able to do business with the rest of Europe despite Brexit, according to legal experts, Katherine Griffiths reports.
The debate on whether London’s financial sector will be crippled by Brexit is focused on the ‘passporting’ rule, which allows financial institutions to base themselves in one EU country and do business in any other.
Some senior City lawyers believe that these bank’s warnings are misplaced, as international rules that come into force in January 2018 should make it straightforward to gain passporting rights, even if the UK has left the EU. These rules are part of the update to the Markets in Financial Instruments Directive. MiFID II is part of the drive by European authorities to make markets stronger and more transparent in the wake of the financial crisis.
Sceptics have voiced fears that European authorities may try to resist granting the UK equivalence, as a punishment for leaving the EU and to enhance the chances of France or Germany gaining financial services business from London.