Brexit will 'stall' City, says Goldman Sachs chief

Lloyd Blankfein, whose bank employs more than 6,000 in London, says it has ‘contingency plans’ to move staff out of UK

The chief executive of Goldman Sachs has warned that London’s financial centre will “stall” due to the turmoil of the Brexit process.

Lloyd Blankfein, who runs the world’s second-largest investment bank, said a three-decade expansion that has turned London’s financial services sector into a world leader could grind to a halt.

“It will stall, it might backtrack a bit, it just depends on a lot of things about which we are uncertain, and I know there isn’t certainty at the moment,” Blankfein said in an interview with the BBC. “I don’t think it will totally reverse.”

Blankfein also said there would need to be an implementation period of at least a “couple of years” after the Brexit deal had been agreed in early 2019 to allow companies to adjust.

“We are talking about the long-term stability of huge economies with hundreds of millions of people and livelihoods at stake, and huge gross domestic product,” he said. “So, if it takes a little while, I’d rather get it right than do things quickly.”

If not enough time were factored in, banks such as Goldman would have to act “prematurely” and possibly move some of their operations and jobs.

A Conservative party spokesman said: “The City is the world’s leading financial centre and only Theresa May and the Conservatives have a plan to make sure it stays that way.

Catherine McGuinness, policy chairman at the City of London Corporation, said: “What Lloyd Blankfein at Goldman Sachs has said about the City is the same as a number of other leading international financial institutions. It is entirely right that firms plan for all negotiation scenarios and assess what impact this might have on jobs in the UK. Some of these may relocate to other global financial sectors and the City might not grow as quickly as it otherwise would have done. But this is entirely down to what sort of deal we get.

“That is why our sector has a key role in communicating our priorities: access to international talent, a transitional agreement and a bespoke deal that enables two-way access from the EU27 to the UK.

“My goal in taking up office is a vibrant, thriving City contributing to the prosperity and wellbeing of the capital and the country.”

In March, it emerged that Goldman had started to transfer hundreds of staff out of London ahead of a Brexit agreement as part of “contingency plans”. The bank employs more than 6,000 people in the UK.

On Friday, Blankfein said he hoped not to trigger a large-scale move out of the UK. “We don’t have big plans now. We are looking; we are trying to avoid,” he said.

However, he added that the bank had held discussions with a number of cities across Europe, understood to include Frankfurt and Dublin.

“Obviously, a lot of people elect to have their European business concentrated in a single place, and the easiest place, certainly, for the biggest economy in the world [the US] to concentrate would be the UK – the culture, the language, the special relationship – and we are an example of that,” he said.

“If you cannot benefit from access to the EU from the UK, and nobody knows what those rules and determinations will be, then the risk is there will be some adjustment that will cause some people to have a smaller footprint in the UK.”

Richard Gnodde, the chief executive of Goldman Sachs International, said in March that the bank was to take extra office space in Frankfurt and Paris, and planned to upgrade its facilities in several cities on the continent over the next 18 months.

“We’ll be taking extra space in a number of them and be increasing our headcount and infrastructure around those facilities,” he said. “What our eventual footprint will look like will depend on the outcome of [the Brexit] negotiations and what we are obliged to do because of them.”

Goldman has about 200 staff in Frankfurt and 100 in Paris.

In January, the bank was the subject of speculation that it could shift half of its workforce out of London, with 1,000 of the jobs relocated to Frankfurt.


Mark Sweney

The GuardianTramp

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