Analysis carried out by the British think-tank UK in a Changing Europe has concluded that the United Kingdom's impending exit from the European Union will have far less of an impact on the financial services industry than has generally been feared.
Led by Dr. Meredith Crowley of the University of Cambridge, the study concluded that financial services are not at particular risk from Brexit because they are intensively sold within the domestic UK economy and the financial services industry as a whole is highly globalized.
Someone should tell JP Morgan and Goldman Sachs. And quickly!— Jo Maugham QC (@JolyonMaugham) January 26, 2018
In late 2017 the EU's chief Brexit negotiator Michel Barnier caused consternation in the British business community when he announced that UK financial organizations would lose their "passporting rights" to operate within the bloc once the UK leaves in 2019.
While attending the World Economic Forum in Davos Switzerland, UK Chancellor Phillip Hammond insisted that any arrangement reached between the two sides had to include a special deal covering British financial services or the entire process risked collapse.
In a media release Professor Raquel Ortega-Argiles who worked on the report suggested that concerns over the City of London was distracting Whitehall's attention from economic sectors in greater need of government protection.
"The results suggest that while financial and manufacturing services are very important, the UK Government's emphasis on securing special UK-EU agreements for City-based financial markets may be misplaced, and that emphasis should be placed on helping the other much more exposed sectors which do not have strong lobbying power. The sectors that are going to be hardest hit by a no deal Brexit are a range of services industries. They are parts of the economy who don't lobby Westminster and rarely get the attention they need," she said.
Based on an analysis of at least 5,000 commercial goods, the study determined the industries most likely to be negatively affected by a "no-deal" Brexit scenario in which the United Kingdom leaves the European Union without having negotiated a free-trade agreement, thus reverted to the rules of the World Trade Organization (WTO).
Of the 54 British industries examined, 15 were concluded to be at significant risk because of Brexit with between 20 and 36 percent of their economic activity set to be negatively impacted.
Among the most vulnerable to this scenario are the scientific, technical, professional service and administrative industries which collectively accounting for at least 2.5 million jobs in Britain and $US200 billion (£140 billion).