The president of financial services giant Morgan Stanley has warned that the City of London will suffer as a result of Brexit.
Colm Kelleher said some firms would pull their headquarters out of the UK unless passporting arrangements, which allow firms based in one EU nation to operate across the bloc, were retained.
Mr Kelleher told BBC Radio 4's Today programme that Brexit was causing a lot of uncertainty that would slow down investment into the UK.
“It is that uncertainty which is causing problems. You’ll see a slowdown in investment into the UK because people, corporations, like certainty before they invest. So the sooner we get some clarity on where we are heading the better.”
He added: “I believe, and I have said prior to the referendum, that the City of London will suffer as a result of Brexit, the issue is how much.
“I’m convinced that London will retain its reputation and prestige as a global financial services centre but clearly some size of our businesses will have to be moved out of London into Europe, into European headquarters, with the absence of any passporting agreement. But it’s very hard to ascertain what that means at the moment.
“I do think generally, though, that capital markets in Europe will shrink as a consequence of this.”
He said Morgan Stanley has urged the British government and Brussels to ensure a long transitional period was built into the deal so firms have time to adjust.
Concern
His concerns were echoed by
Rob Kapito
, president of global investment corporation
BlackRock
. He told
Today:
“There is a lot of concern about Brexit.”
Mr Kapito said: “Specifically in the financial community, people that have global operations are very concerned about their own people because many people worked cross-border, many have spouses that are working, and there are very few answers to any of the questions as to whether they will be able to maintain their jobs. Will they have to move home?
“What the location change might be if there is retribution by other countries in order to keep other countries from pulling out of the EU? Where might the financial centre move to if there is a new financial centre?
“So a lot of companies are looking internal and trying to understand what is going to be the impact on their employees and then to the economy.”
He said companies were already looking at which other countries they might move their operations to.
Real estate
“I don’t think there is any firm, any good firm, that has not already started to look at real estate in different areas outside of the UK in case they have to move larger operations.
“There is no one that doesn’t have people looking at tax implications, investment implications, manufacturing implications.
“So being one of the largest investors in the globe we are very concerned about the future economics to a lot of corporations around the globe and how it will affect them.”
He said the “unintended consequences” of Brexit were “very significant and they impact everyone across the UK”. – PA
