City of London 'will find withdrawal from single market serious but not fatal'
Pulling Britain out of the European single market will be "serious but not fatal" for the City of London, said law firm Clifford Chance as Prime Minister Theresa May outlined her plans for Brexit.
Simon Gleeson, regulatory partner at the magic circle law firm, said London would remain Europe's financial centre in the short term, making negotiations over arrangements for market access and regulatory co-operation less difficult between Britain and the European Union.
The firm's statement comes as London's financial firms wait with bated breath to discover whether the UK can hold on to passporting rights which allow them to trade freely across Europe.
Banks have issued stark warnings since the Brexit vote, claiming thousands of jobs would shift to rival financial centres across Europe and the United States if Britain loses the right to sell financial services to the EU.
Xavier Rolet, chief executive of the London Stock Exchange Group, told the Treasury Select Committee last week that the financial services industry should be handed a five-year transition period after Article 50 is triggered.
On a transitional deal for the City, Mr Gleeson added: " Timing is critical.
"The sequence of events should be inter-governmental agreement followed by industry responding to that decision.
"Forcing industry to reconfigure itself in advance of knowing what the intergovernmental agreement is is a recipe for inefficiency and wasted costs.
"This is why a post-agreement implementation phase is essential, and should be an early commitment from both sides."
Anthony Browne, chief executive of the British Bankers' Association (BBA), said Prime Minister Theresa May had provided "important clarity" on the UK's future relationship with Europe.
Mr Browne previously warned that Bank bosses had their fingers "poised quivering over the relocate button" as they awaited clarity of Britain's Brexit deal with the EU.
US banking giant JP Morgan said 4,000 jobs would leave the UK, Goldman Sachs threatened to move 2,000 roles if Britain loses passporting rights and HSBC claimed it would transfer 1,000 positions from London to Paris following the Brexit vote.
In reaction to Mrs May's speech, Mr Browne said: "All existing EU member states have a mutual interest in ensuring that there's a smooth exit.
"The Government's support for interim arrangements is essential to ensure there are no cliff-edge effects when the UK leaves the EU."
Mark Boleat, policy chairman at the City of London Corporation, said Mrs May's pledge to pull Britain out of the European single market made the need for a transitional arrangement even more important.
"Government's phased implementation plan must avoid a cliff-edge and will be beneficial for firms across all sectors, especially financial and professional services firms.
"The Government must stick to this commitment."
Last week, Bank of England governor Mark Carney added his voice to a chorus of city heavyweights calling for a transitional arrangement for the financial services sector once Article 50 is triggered.
He said: "It is the best mitigant to those (financial stability) risks, yes. It's welcome."
Miles Celic, chief executive of TheCityUK, said the City would support Mrs May's phased approach for business.
"The Prime Minister recognised the important role the UK plays as Europe's financial centre.
"Her assertion that the industry must be able to provide its services cross-border post-Brexit will benefit firms and customers in the UK and the EU."
He said she was right to try to strike a bespoke agreement with the EU, claiming there was "no existing off-the-shelf solution which can deliver the right deal for the UK".