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28 Oct 2016 01:00pm

Sadiq Khan warns hard Brexit will cause millions of job losses

Mayor of London Sadiq Khan has warned that the impact of a “reckless hard-headed, hard nosed, hard Brexit” will not just affect the City of London but “would ripple out far and wide” with millions of jobs and billions of revenue lost across the country

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Caption: Leaving single market would be “economic self-sabotage”, London mayor warns

Speaking at the City of London Corporation dinner, the mayor of London warned that the UK’s decision to leave the EU could have “the biggest impact on the City of London since the reforms of the 1980s”.

Khan accused the Tory government of being “blasé” and of “shrugging off” concerns over the ability to attract the best talent from around the world, access to the single market and "passporting" rights.

He said leaving the single market would mean unnecessary “economic self-sabotage” and argued that unless suitable agreements are negotiated, the knock-on impact of job and revenue losses would hit the entire country, not just London.

Going forward, we need to see a more pragmatic position, not the dogmatic political approach we’ve seen from some

London mayor Sadiq Khan

Many of the world’s major banks have European headquarters in Britain and many have already said they are preparing to move staff and activities from the UK as soon as next year unless access to the bloc's single market is maintained and they continue to benefit from the EU’s passporting arrangement.

Khan stressed that in order for Britain to continue to prosper, “we need our financial services industry to continue to prosper too".

“My motivation is not about protecting old City institutions just for the sake of it or presenting a London-centric approach. It’s about protecting our country’s economy - protecting jobs, promoting growth and safe-guarding prosperity for the next generation,” he said.

Khan stressed the importance of getting a “unique deal” that not only works for London, but Britain and Europe.

"If we fail to get a good Brexit deal, businesses are more likely to move to New York, Singapore and Hong Kong than to other cities in Europe. Something that would not just be bad for us, but for our European neighbours too,” Khan warned.

Calling again for the UK to retain access to the single market and the best talent from around the world, the mayor added that a “hard Brexit really is a zero-sum game for Europe”.

European Central Bank council member Philip Lane echoed Khan’s concerns, warning that there is likely to be a significant flight of financial activity out of Britain if the UK opts for a hard Brexit and companies are no longer regulated on equivalent terms to those in the EU, Reuters reported.

"If the UK-EU negotiations deliver an agreement that effectively preserves the single passport for UK-resident entities selling into the EU, the net impact on the structure of the European financial system might be quite minor," Lane said at a Reuters Newsmaker event.

"However, in scenarios in which UK-resident firms are no longer treated as equivalent to EU firms for regulatory purposes, it is likely that significant migration of financial activity from the UK to the EU will occur."

The mayor complained that his concerns seem to be “falling on deaf ears” and called on City of London business leaders to join him in stepping up efforts in stressing to the government and the public the importance of the financial services sector.

“Going forward, we need to see a more pragmatic position, not the dogmatic political approach we’ve seen from some,” he said.

The mayor also used his speech to encourage the government to follow his lead by investing in infrastructure projects that will “not only help to reassure investors and stimulate growth, but protect us from the potential economic bumps from Brexit”.

“The government will not only be judged on the Brexit deal that is finally negotiated, but on how this delicate period leading up to Brexit is handled. And so far, it has to be said – they are scoring poorly,” he told City business leaders.

“It’s clear that the uncertainty created by the lack of clarity on the Brexit negotiations is making it more difficult for businesses to make important investment decisions,” he warned.

Khan urged the chancellor Philip Hammond to use the Autumn Statement to boost confidence with a number of measures, such as improving the proposed reforms to business rates and providing a cast-iron commitment to delivering Crossrail 2, the Bakerloo Line extension and improvements to suburban rail services.

While Khan is focused on the government securing the best deal following the UK’s vote to leave the EU, Tony Blair has suggested a second referendum in order to remain part of the bloc.

Following an article in the New European newspaper in which the former prime minister argued that the British people should have the opportunity to change their minds following the EU referendum if the deals available turn out to be unfavourable, Blair told the BBC Radio 4 Today programme that the UK should keep its options open.

Blair stressed that despite making a decision, the UK is still in the dark as to what the implications of that decision are until the negotiating period begins.

“We’ve had claim and counter claim but over these coming months and coming two years maybe we will be able to see what it is we are being offered and we will be able to make an assessment of whether we are going to be better off economically, socially and politically outside Europe rather than inside it,” he said.

Blair added that the decision can’t be changed “unless it becomes clear in one way or another that the British people have had a change of mind because they’ve seen the reality of the alternative”.

“So right now, as these months progress, particularly when the British government actually sets out its negotiating position when it triggers article 50 we will start to see what the real life implications are of this decision to go,” he said.

“If it becomes clear that this is either a deal that doesn’t make it worth our while leaving or alternatively a deal that’s going to be so serious in its implications that people may decide they don’t want to go there’s got to be some way either through parliament or another election, possibly through another referendum with which people express their view,” Blair added.

Sinead Moore

 

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