Europe Probes Bankers Clinging to London Jobs: Beyond Brexit

What’s happening? Banking jobs are increasingly moving from London to the European Union, and official data show U.K. trade with EU countries plunged in the first quarter. Big international banks in the EU including Goldman Sachs, Citigroup and Barclays are facing a probe by the European Central Bank over whether they rely too much on London staff, people familiar with the matter told Steven Arons and Nicholas Comfort.

It adds to a sense that thousands more high-paying finance jobs may end up drifting out of London for a variety of reasons. 

Deutsche Bank highlighted that trend earlier in the week with a decision to shift a quarter of its U.K. corporate banking staff to the EU and Asia, a move it said wasn’t directly related to Brexit.

The dust hasn’t settled on how Brexit will play out for banks, Bank of England Deputy Governor Jon Cunliffe told lawmakers on Monday. He said so far things are playing out as the central bank expected, with some financial services moving to the eurozone and the U.S.

Remember life before Brexit? Britain’s trade with the EU was 23.1% higher in the first three months of 2018 than the first quarter of this year. The pandemic had something to do with that.

The government notes merchandise exports to the bloc were near the 2020 average in March. There’s also an impact from stockpiling at the end of last year. Still, there’s a growing sense that friction at the border following the U.K. departure from the customs union is having a major impact.

Trade with non-EU countries fell only 0.8% in the same period.

The U.K. was the only G-20 member to miss out on a first-quarter trade surge because exports and imports had already jumped in the final months of 2020, when companies in Britain stockpiled ahead of the country exiting the European Union’s single market. 

India is the next stop for Global Britain. The U.K. will begin a 14-week consultation on a potential trade deal with the world’s biggest democracy, with an aim to start negotiations in the autumn. It’s a big political move with small economic potential with about 3% of the trade volumes Britain had with the EU in 2019.

The Taj Mahal in Agra, India.Photographer: PRAKASH SINGH/AFP via Getty Images

Tariff cuts for agricultural products coming from Australia agricultural may be phased in over 15 years, the Sun newspaper reported. That transition period would give British farmers time to brace for competition from Australia, where large-scale operations could undercut U.K. prices even after a journey from the other side of the world.

Prized as another jewel in the post-Brexit crown, a U.K.-Australia deal is expected to add a meagre 0.02% to the British economy over that time.

Paralysed through the pandemic, much of the U.K. economy has yet to feel the effects of post-Brexit visa rules on sectors that draw in migrants from the EU. To attract skilled workers, Home Secretary Priti Patel announced plans for the “wholesale reform” of Britain’s immigration system, which she said was “broken,” though “this country isn’t.”

There’s no alternative to the Northern Ireland protocol, European Commission President Ursula von der Leyen said Tuesday. She dismissed U.K. demands to amend the terms of how the Brexit withdrawal agreement is implemented.

It’s well known that dabbling with the border arrangements will impact on the peace in Northern Ireland. Now the reality is biting. Despite the worst violence in years in April, the EU refuses to back down.

Lizzy Burden

We aim to keep you up to date on how the U.K. navigates the world after Brexit.

Got tips or feedback? Email us at brexit@bloomberg.net

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Europe Probes Bankers Clinging to London Jobs: Beyond Brexit

Almost a third of U.K. logistics companies expect to face trucker shortages this year, and 10% say recruitment issues pose an “extreme barrier” to the recovery from the pandemic. That’s according to lobby group Logistics UK, which called on the government to provide interest-free loans or grants to train more truck drivers.

It’s one of the labor shortfalls that has emerged partly because drivers left to their own countries during the pandemic.

The majority are not expected to return due to post-Brexit visa rules.

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— With assistance by Tom Metcalf