Writing in The Guardian, Anthony Browne said banking will be the most affected sector of the UK economy and deals around Brexit continue to be discussed.
Browne said the real impact of Brexit will be felt the day after the UK leaves the EU and banks lose their regulatory approval to provide services as passporting rights disappear overnight.
He said banks cannot wait and see what happens, which is why many international banks now have project teams working on which operations they need to move to continue serving their customers across Europe.
“Their [the banks] hands are quivering over the relocate button. Many smaller banks plan to start relocation before Christmas and bigger banks are expected to start in the first quarter of next year.”
Browne said that to minimise, what he called ‘self-inflicted damage’ on free trade in financial services, financial regulators should be included in the conversation over Brexit.
“If we left it all to the regulators, we would have a relatively quick and rational economic solution.
“But politics trumps economics and it will be the politicians who decide. They seem keen to enter what will in effect be anti-trade negotiations.”
There has been a call for the passporting system currently in place to be scrapped with the UK potentially adopting a “third-country equivalence” instead, but Browne warned this is simply not strong enough.
“The EU’s “equivalence” regime is a poor shadow of passporting; it only covers a narrow range of services, can be withdrawn at virtually no notice and will probably mean the UK will have to accept rules it has no influence over.
“For most banks, having equivalence won’t prevent [them] from relocating their operations,” said Browne.
However, Browne was optimistic that London will survive as a global financial centre, saying the inventive nature of the finance industry will help it find a way to adapt to the changes.