London’s lead in financial services technology risks being blunted by bureaucratic new migration rules, according to business leaders cited by the latest House of Lords report on leaving the European Union.
Peers conclude that the fast-growing sector is one of a number of world-beating industries at risk if London loses its status as an international melting pot for talent, partly because Europeans may not be able to come to work in the UK so freely.
Some 60,000 EU nationals work in financial services jobs in the UK, and although the government has insisted that it does not wish to shut the door to highly skilled workers from abroad, City employers report that many are increasingly nervous since the referendum to leave the EU.
“[We are] already finding less desire among bright eastern Europeans, Germans and French people to come and work in the UK,” warned Giles Andrews, chairman of startup Zopa, which says half its workforce is from outside the UK.
Another witness to the Lords EU committee estimated that nearly a third of the entrepreneurs behind UK startup companies in the sector were born overseas, a sign of an “inherently international” industry where access to talent was paramount.
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“It is not a Lego set in which little pieces can be built up and put somewhere else,” said Alex Wilmot-Sitwell of Merrill Lynch. “The interconnectedness is very significant, and … we need to be assured that whatever happens from this point forward, the consequences and implications of any steps are understood.”
Several of the witnesses call for a transition phase of two to three years, on top of the two-year negotiation phase, which is expected to begin in April, and compared the risks of getting it wrong to moving “nuclear waste”.
“Migrating huge businesses from one jurisdiction to another requires an enormous amount of work,” said Wilmot-Sitwell. “That process is very dangerous; it is fraught with risks. The materials that are being moved are risky. You do not move nuclear waste in a race; you do it in a carefully coordinated and managed process.”
The report calls on the Treasury to act as a champion for the City during the Brexit negotiations, warning that political pressure from rival European centres could be used to disrupt a move from passporting to so-called “equivalence” rules.
Philip Hammond, the chancellor, has also insisted that he sees “no likelihood of our using powers to control migration into the UK to prevent companies from bringing highly skilled, highly paid workers here”.
But witnesses to the Lords inquiry warned that this may not be enough for financial services firms, who want “to get the specialised labour that they need in a relatively efficient and smooth way”. Sir Charles Bean, of the London School of Economics, told the committee that the chief worry among employers is that “some heavy bureaucratic process is put in place that takes a very long time to operate and becomes very cumbersome”.
[Source:-The Guardian]
