May vows ‘open’ Britain as banks shift jobs from London

Prime Minister Theresa May on Thursday told the world’s elite that Britain is open for business despite Brexit, even as banks announce they are planning to shift jobs out of London.

May sought to reassure the World Economic Forum in Davos that Britain’s vote to quit the European Union did not signal a retreat into protectionism, as a slew of banks revealed plans to relocate staff following her announcement Tuesday that Britain would leave the EU’s single market.

“The United Kingdom -– a country that has so often been at the forefront of economic and social change -– will step up to a new leadership role as the strongest and most forceful advocate for business, free markets and free trade anywhere in the world,” the prime minister told a packed hall.

It was the same venue where China’s President Xi Jinping on Tuesday delivered a clarion call for open markets and against protectionism, in the lead-up to Donald Trump’s inauguration as US president on Friday.

May added that Britain will “seek the freedom to strike new trade deals with old friends and new allies right around the world.” London is already in discussions on possible deals with Australia, New Zealand and India, and has been seeking closer ties to China for years.

Business leaders gathered in Davos, anxious for clarity on how Brexit will affect them, expressed relief that May’s negotiating strategy is taking shape — though they said the proof will be in her much-trumpeted trade deals.

Murray Rode, CEO of US-based Tibco Software whose European headquarters are in London, said May clearly meant to convey “Britain’s going to be separate but global, so everybody calm down”.

“But it’s the actions that follow that are going to matter,” he stressed.

Lance Uggla, president of financial analysis firm IHS Markit, said May had given “a very clear vision and stance” of how she intends to approach divorce negotiations following Britain’s referendum vote in June to quit the EU.

But he added May had “not yet” provided enough details on what happens to reassure nervous multinationals.

– Banking exodus? –
That much was clear from announcements from several major banks that they plan to relocate staff from London’s major financial hub, to ensure that they can continue to do business across the EU with one operating license.

JP Morgan CEO Jamie Dimon said Thursday there “will be more job movement” than the 4,000 the bank had previously estimated, while HSBC says 1,000 of its investment banking jobs will leave the City for Paris.

UBS said it “will definitely have to move” some staff from London, while Goldman Sachs was reported to be halving its London staff to 3,000.

Lloyd’s bank was said to be considering Frankfurt as a new base, while Lloyd’s the insurer said it was close to a decision on opening a European office to operate alongside its historic London HQ.

Those movements represent a potentially heavy blow for Britain, where financial services represent a tenth of economic output.

London’s mayor Sadiq Khan told AFP that rival financial hubs in New York and Asia would be the ultimate winners of banks deserting Britain — rather than rivals in Europe.

“The reality is they’ll probably go to Hong Kong, Singapore or New York. So a so-called hard Brexit could be a lose-lose, a lose for London and the UK, and a lose for the EU too,” he said.

May insisted in her pitch to the Davos crowd that Britain was “open for business”, saying she would seek “an ambitious free trade agreement between the UK and the European Union”.

– ‘Don’t punish Britain’ –
But Pierre Moscovici, European commissioner for economic and financial affairs, said Britain “cannot have all the advantages of being a member of the club when you are out of the club”.

France and Germany, meanwhile, signalled a more conciliatory approach.

Responding to May’s warning that a “punitive deal that punishes Britain would be an act of calamitous self-harm for the countries of Europe”, German Finance Minister Wolfgang Schaeuble said his country had no intention of penalizing Britain.

“The position from the German governement has been from the very beginning that we will not punish the UK,” he told an audience in Davos, adding however that “we were not happy” about the Brexit decision.

France’s Foreign Minister Jean-Marc Ayrault also said his country had no intention of “punishing” Britain.

The referendum result was widely interpreted as a rebellion against globalisation with voters citing immigration and job losses as major factors in their decision to vote out.

May admitted that globalisation “can make people fearful” and said that governments needed to be more involved to make sure it delivers “for all of the people in our respective countries”.