Brexit could cost as many as 70,000 jobs and banks may lose 40 billion pounds worth of revenues. Such losses could prove catastrophic for a country that has already been struggling with sluggish economic growth and the fallout from the Brexit Vote. Yet the worst may just be beginning.
The above data is according to a banking lobby group, TheCityUK lobby, and was prepared by Oliver Wyman. In additional to the lost jobs and revenues, it’s estimated that the government could lose as much as 10 billion pounds in revenues. Given how high public debt is in the United Kingdom, this certainly isn’t good news for the government.
The United Kingdom’s banking system will likely suffer one of the biggest hits from the pull out. Given how vital the finance sector is to the United Kingdom this is very worrisome indeed. London is one of the world’s leading finance hubs, but this role may be diminished post-Brexit.
Already, European and American banks have hinted that they will curtail their investments and commitments to London as a finance center. Simply put, the grass might be greener on the other side. In other words, the investment environment could be better in the European Union.
Is a Soft Brexit Possible?
If the UK were to leave the EU, but retain access to the common market, Wyman believes that only 4,000 jobs would be lost. Additionally, 2 billion pounds worth of revenues and 500 million pounds worth of tax revenues erased. This “soft Brexit” would certainly reduce impact on the economy.
However, it appears unlikely that the United Kingdom will be able to remain in the common market. As a result, losses will be much steeper. A hard Brexit, which will see the UK pull out of the EU completely, will almost certainly curb economic growth.
At the other end of the spectrum, if the United Kingdom were to lose all passporting rights, it could cost a lot more. In total, as many as 35,000 industry jobs and 20 billion in revenues per year and 5 billion in tax revenues could be wiped out. Add in the spill out effects of the Brexit and the total cost could be much higher.
Most companies and lobbyists have been fighting hard to convince Theresa May to make sure that the United Kingdom takes a soft approach. This would mean retaining access to the common market. However, the concessions that the United Kingdom would have to offer, such as freedom of movement, appear to not be in the mix.
After all, these issues fueled the Brexit vote in the first place. Ignoring them might be political suicide for politicians. Besides, the people made their will known in the Brexit vote, and now politicians have a duty to implement that will.
Given the impact the Brexit move will have on the UK’s finance industry, it’s important to consider diversification. Citizens of the UK should look into off-shoring some or all of their wealth, and engaging in other wealth management strategies. Even if the fallout isn’t as bad as many believe it will be, it’s better to be prepared than caught unaware.