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Florence declined and London may too, banks warn ahead of May's speech
September 20, 2017 / 11:02 PM / 2 months ago

Florence declined and London may too, banks warn ahead of May's speech

LONDON (Reuters) - Britain is in danger of losing its place in the financial world much in the same way Florence did after its Renaissance heyday, an industry group warned on Thursday.

FILE PHOTO: A general view of Ponte Vecchio (Old Bridge) in Florence, Italy March 31, 2017. Picture taken March 31, 2017. REUTERS/Tony Gentile/File Photo

In statement ahead of Prime Minister Theresa May’s speech on Brexit in the Italian city, TheCityUK, Britain’s most powerful finance lobby said it was “crunch time” for finance firms.

It cautioned that companies are already moving jobs overseas because of Britain’s decision to leave the European Union, and further faltering in Brexit talks will lead to irreversible decisions.

After months of talks that have made little progress and deepened rifts in her party, May will on Friday try to put the negotiations on track and reassert her authority in a speech in Florence.

That was not lost on TheCityUK.

“Florence was once a powerful European financial center, but lost its position as other better-connected centers arose elsewhere. We don’t want to see the same thing happen to the UK, or indeed to Europe as a whole,” it said.

The future of London as Europe’s financial center is one of the biggest issues in the Brexit talks because it is Britain’s largest export sector and biggest source of corporate tax revenue.    

FILE PHOTO: A view shows the ceiling of the Chapel of the Princes, part of the Medici Chapels at the Basilica of San Lorenzo in Florence October 15, 2014. REUTERS/Regis Duvignau/File Photo

“For our industry, this really is crunch time,” said Miles Celic, TheCityUK’s chief executive officer.

    “Many firms are already moving parts of their operations out of the UK and Europe. When they’ve gone, it’s hard to see them coming back.”

Around 10,000 finance jobs will be shifted out of Britain or created overseas in the next few years if the UK is denied access to Europe’s single market, according to a Reuters survey of firms employing the bulk of workers in international finance.

FILE PHOTO: Flag wavers perform in Santa Croce Square before the Calcio Fiorentino (historic football) semifinal match between Rossi (Red) Santa Maria Novella against Verdi (green) San Giovanni in Florence, Italy, June 10, 2017. REUTERS/Alessandro Bianchi /File Photo

Some politicians and financiers say, however, that banks are exaggerating the threat to the economy from Brexit.

One of the key demands of the industry is that Britain and the EU negotiate a significant transition period in order for firms to adapt to the new relationship and avoid financial instability. But TheCityUK has warned that little progress has been made on agreeing such an arrangement.

Catherine McGuinness, head of policy at the City of London, the local government that administers Europe’s biggest financial center, told Reuters she is increasingly “despondent” about the lack of progress in the divorce talks.

“You can hammer out the best possible deal in the world, but it you take too long about it, you may lose some of the assets that you need to make the best future,” she said.

“We really would like to see some progress, putting pragmatism and jobs and the economy above politics and emotion.”

Reporting by Anjuli Davies and Andrew MacAskill Editing by Jeremy Gaunt

Our Standards:The Thomson Reuters Trust Principles.
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