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UK banks 'planning overseas move' over Brexit fears, industry chief warns

The British Bankers' Association has warned that the industry could move abroad over Brexit fears. Credit: PA Wire

The financial services industry is already planning to move business overseas because of the uncertainty of the Brexit process, the head of the British Bankers' Association has warned.

Anthony Browne said the industry fears EU politicians will want to put up trade barriers in an attempt to weaken the City of London during Brexit negotiations.

Mr Browne said smaller banks could start moving some operations within weeks, with larger institutions possibly following in early 2017.

Writing in the Observer, he commented: "Their hands are quivering over the relocate button. Banking is probably more affected by Brexit than any other sector of the economy, both in the degree of impact and the scale of the implications.

The banking industry fears that rhetoric on Brexit negotiations is 'hardening' across Europe. Credit: PA Wire

"It is the UK's biggest export industry by far and is more internationally mobile than most. But it also gets its rules and legal rights to serve its customers cross-border from the EU."

Mr Browne added: "For banks, Brexit does not simply mean additional tariffs being imposed on trade - as is likely to be the case with other sectors. It is about whether banks have the legal right to provide services."

The industry would like to see the continuation of the EU's "passporting" regime, which allows UK-based financial services companies to operate throughout Europe without seeking out separate authorisation.

Mr Browne warned that "the rhetoric is hardening" in Europe, and politics could override the economic advantages of keeping the current system in place untouched.

He continued: "The problem comes - as seems increasingly likely, judging by the rhetoric - when national governments try to use the EU exit negotiations to build walls across the Channel to split Europe's integrated financial market in two, in order to force jobs from London.

"It might lead to a few jobs moving to Paris or Frankfurt, but it will make it more expensive for companies in France and Germany to raise money for investment, slowing the wider economy."

A government spokesman said: "The Government is keenly aware of the importance of the financial services sector to the UK economy.

"DExEU and HMT are leading work considering options for the future relationship between the UK and the EU in the areas of financial services and have the resources required to get the best deal for the UK.

"Large numbers of officials are considering different aspects of potential impacts on financial services and other sectors, as well as cross cutting issues that affect more than one sector."