RBS chair: Brexit to cause ‘considerable damage’

RBS chairman Howard Davies

RBS chairman Howard Davies warned in an interview with Sky News there is now a “very, very, very tight” time frame for UK ministers to agree terms of a transitional Brexit agreement with the EU if it hopes to stop major finance firms moving jobs and operations from the UK to other countries.

Davies said the City of London would definitely suffer job losses as a result of Brexit.

The RBS chairman said the UK Government has “less than six months” to strike a Brexit deal in order to prevent an exodus from London’s financial district.

Davies claimed financial firms would wait only until March next year before triggering contingency plans to relocate away from the UK.

The RBS chairman said EU member states have “no incentive” to speed up talks on an interim Brexit deal — because the longer they “drag this out” the more chance there is of jobs moving to other European finance centres such as Frankfurt, Paris and Amsterdam.

“If we go in for Brexit we will find that jobs will leave the City and there will be a rebalancing of financial activity within Europe,” said Davies.

He suggested there would be “quite considerable” damage to London’s financial district over time because US, Japanese and Chinese banks have “chosen to put the enormous lion’s share of activity in Europe based in London.”

“They’re now rebalancing and that’s going to happen whatever the outcome of the Brexit negotiations are,” he said.

Davies said RBS would only see a “relatively small” number of jobs move to Amsterdam under its Brexit contingency plan.

He claimed the terms of any transition deal needed to be known within the first three months of next year if the UK Government hopes to stop firms shifting resources away from London.

“If nothing is certain by the end of the first quarter of next year, by March, then people will trigger those contingency plans,” he said.

“Because they won’t have time to put them in place by March 2019 unless they start at least a year ahead.

“That’s the moment at which we need to know what the transition arrangements are.”

Davies said the tight time frame for Brexit talks revealed the “unwisdom” of triggering Article 50 “without knowing what the endpoint was.”