Depending on who you talk to, 232,000 U.K. jobs will be headed out the door after Britain withdraws from the European Union. Or it could be as few as 4,000.
The range of forecasts — from the apocalyptic vision of London Stock Exchange Group Plc Chief Executive Officer Xavier Rolet to the conservative estimate, from management consultants Oliver Wyman — often says more about the interests of the people making them than the likely fallout from Britain’s divorce with the EU. As details of the banks’ contingency arrangements become clearer, the initial people moves they are planning are said to be more in the hundreds than the thousands.
The truth is no one knows how many jobs will leave the City of London and Canary Wharf, the two main financial districts. What the U.K. capital will look like after Brexit, and which services banks will be able to provide EU clients from bases in the city, depends on what deal Prime Minister Theresa May wrings from her 27 EU partners. Filling the information void in the meantime are finance executives, lobbyists and politicians jockeying for influence over the makeup of that final agreement.
Bank bosses with their European headquarters in London are among the most vocal. They have the most to lose if U.K.-based firms are stripped of their passporting rights — the ability of companies authorized in one EU country to sell their products freely throughout the $19 trillion economic bloc.
“They are a bit like dogs backed into a corner and barking — it’s just noise,” said Jason Kennedy, chief executive officer of Kennedy Group, a London-based recruitment firm for the finance industry. “This is all about applying as much pressure as possible on the government to get the best deal. What have the banks have got to lose? Scream the house down and see what happens.”
Few are more outspoken than JPMorgan Chase & Co.’s CEO, Jamie Dimon. Before the June 23 referendum he told U.K. staff that as many as 4,000 of them could be relocated in the event of Brexit. In January, he said that number could be even higher — or lower — depending on how the Brexit negotiations played out.
That same month, he told May at a meeting of non-U.K. bank chiefs in Davos, Switzerland, that she needed to secure a lengthy transition period guaranteeing ongoing access for all U.K. companies to the single market. Without it, banks, insurance companies and asset managers would head for the exit, with London’s Michelin-starred restaurants and other service industries not far behind, according to a person briefed on the discussion.
HSBC Holdings Plc CEO Stuart Gulliver has taken a similarly hard line. He laid out plans more than a year ago to move 1,000 of the bank’s 5,000 London-based investment banking staff to Paris. While he’s repeated the claim often since, the bank has yet to contact any of the affected employees, Gulliver said last week.
“Each business lobby is motivated — the worse you can make it sound at this point, the more likely your sector will get special treatment,” said Thomas Sampson, assistant professor of economics at the London School of Economics. “I don’t know how analytically rigorous a lot of the numbers are. You want to take a lot of these numbers with a grain of salt.”
This isn’t the first time London’s financial center has used its considerable clout — the industry paid 71.4 billion pounds ($89 billion) in U.K. taxes in the last fiscal year — to try to win concessions from lawmakers. After HSBC considered relocating its headquarters to Hong Kong in 2015, then-Prime Minister David Cameron’s government scaled back a bank levy that particularly irked the lender.
One senior bank executive, who asked not to be identified discussing his rivals, said he found his peers’ comments disgraceful, characterizing them as attempting to hold the U.K. government hostage with self-serving threats. The banks are bluffing, he said, doubting that the likes of HSBC would move anywhere near as many people as they were threatening to.
Certainly, the jobs the banks are looking to initially move out of the U.K. are not as numerous as once feared. Before the vote, Morgan Stanley was said to be planning to move as many as 1,000 bankers in the event of Brexit. As the bank comes closer to putting its contingency arrangements into action, executives are keeping their options open by initially moving only 300, people familiar with the firm’s plans said last week.
At the other end of the spectrum from JPMorgan and HSBC, Barclays Plc CEO Jes Staley — who has made mending fences with U.K. politicians and regulators a key priority after a series of scandals — said leaving the EU will have little impact on his business. Barclays is planning to move only 150 jobs from London, if any, according to a person familiar with the bank’s contingency arrangements, known as Project Darwin. Of course, of all the world’s big securities firms, his is the most exposed to London.
“Our premise is that London will remain the financial center tomorrow that it is today,” Staley said on a call with journalists last week. “If we need to redeploy assets at the margin, we will. But we’ve been consistent: we don’t believe Brexit will result in a significant move of people away from London.”
A key concern for financiers after the vote was that the U.K. may be stripped of the right to clear euro-denominated derivatives transactions.
Rolet of the LSE, the majority owner of one of the world’s largest clearinghouses for derivatives, told British lawmakers in January that such a move would risk 232,000 British jobs, with many of those headed for New York rather than the Continent. He cited a private EY report that LSE had commissioned, which both parties declined to make available to Bloomberg.
That sum would account for more than 10 percent of the 2.2 million people that the CityUK lobby group says work in finance and related professional services in the U.K.
“I don’t believe that quite that level of jobs is at stake from euro clearing,” said Keith Pilbeam, a professor of economics at London’s City University who forecasts foreign exchange. “A lot of these headline figures don’t make much sense.”
In private, according to people with knowledge of their thinking, bank bosses are downplaying the risks of derivatives clearing leaving London, regardless of what French President Francois Hollande and senior German lawmakers have said repeatedly. Imposing controls on how and where the euro is traded could damage its status as a reserve currency, making the EU unlikely to take a hard line on derivatives clearing, the people said earlier this year.
It’s not just industry executives who are conjuring up ever-larger estimates of how many people will be fleeing. National lobby groups competing to lure refugee bankers from London are also predicting a bonanza — for their cities, at least.
Frankfurt Main Finance’s managing director, Hubertus Vath, said he expects as many as 10,000 U.K. workers to relocate to Germany’s financial capital in the coming years. It’s not clear where they’ll live: there are only 3,000 vacant apartments in central Frankfurt, according to data from property brokers Savills Plc.
Paris has set its sights on luring 20,000 jobs from the U.K. in the coming years, according to Arnaud de Bresson, managing director of the Europlace lobby group. That’s despite only one non-French bank, HSBC, indicating that it will make the city its main base within the EU after Brexit.
One European banking boss quipped that the only way France would be top of his list would be if you turned it upside down.