Think tank urges May government to protect financial firms’ ‘passport’ rights

Banks could start to move staff from London as early as by the end of next year if the UK government fails to secure their ‘passport’ rights to sell services freely across the EU, a new report has warned.

Think tank Open Europe said May’s government must maintain financial firms’ free access to European Union financial markets - known as passporting - in order to prevent an exodus.

The report said: “Based on our background conversations, if banks, for instance, were still unclear about what the future holds one year before the UK formally exits the EU, they would be forced to start making decisions - including over whether to shift part of their business elsewhere.

“Some firms may well start implementing their contingency plans even earlier than that.”

Around a fifth of the UK banking sector’s annual revenue is estimated to be tied to the passport.

Any move by big banks to move operations out of London would hit demand for office space and in turn the capital’s new build office sector. Many major schemes are already on hold while businesses wait for Brexit uncertainties to be ironed out.

Vincenzo Scarpetta, Open Europe’s senior policy analyst, said. “There are plans in case the UK were to leave the single market without any kind of regulatory equivalence. These plans may be set into motion early on if the uncertainty drags on for too long.”

Open Europe had a neutral stance on June’s referendum.