Between 5,000 and 7,000 financial services jobs have been lost from the UK as a result of Brexit, according to the governor of the Bank of England.
Andrew Bailey also warned against the UK becoming a “rule-taker” as it continues to negotiate how much access the City of London will have to EU markets.
Answering questions from MPs on the Treasury committee, he explained that numerous companies had already migrated finance jobs to the EU ahead of the Brexit deadline, but emphasised that the situation had not been as bad as some predicted.
“That, of course, is the day one thing.” he said. “It doesn’t tell us what it might be eventually.
“It’s substantially less, I should say, than the sorts of numbers that were being talked about after the referendum.”
He said that markets have been stable over the past few weeks as the Brexit transition period came to an end and the UK officially withdrew from the EU single market and customs union.
He put this largely down to markets “broadly expecting what they got” in terms of the trade deal struck between the UK and the EU.
The Bank of England had previously warned of volatility in the markets, particularly in the event of a no deal exit.
Mr Bailey said that another impact of Brexit already being seen was an increasing “fragmentation” of markets and that ultimately this will mean “people get less good prices”.
The government agreed a trade deal with the EU on Christmas Eve, just one week before the end of the transition period.
But it is more comprehensive on the trade of goods than services, and does not include an agreement on how much access UK financial services businesses can have to the EU market.
Negotiations on that are continuing and it is hoped a ‘memorandum of understanding’ can be signed by March.
Without a deal, the EU could block UK-based companies selling financial services in Europe.
Discussions will revolve around so-called equivalence, an agreement that would see an alignment of rules and standards between the EU and the UK in return for market access.
“I’m a strong supporter of open markets.” Mr Bailey said, ” I fail to see why people would want to close themselves off from open markets.
“But the situation we find ourselves in is that the EU wants more information from the UK on what its future intentions are on regulation. I think that’s quite problematic frankly in terms of equivalence.”
“I would strongly recommend that we do not become a rule-taker. I think that is a very bad place to end up in. And if the price of that is no equivalence, then I am afraid that will follow,” Mr Bailey said.
He emphasised that under an agreement both the UK and the EU could and should be transparent about future changes to their rules and regulations and that in reality both are driven by an allegiance to global standards.