Although the general public is sharply divided about whether Britain should leave the European Union, it certainly isn’t a secret which side the big banks are on. The likes of Goldman Sachs, Deutsche Bank and HSBC are filling our newspaper headlines recently with daily threats about possible courses of action if Britain does, in fact, leave the European Union.
Big business has rallied to David Cameron’s plea to stay in the European Union, with US banks donating hundreds of thousands of pounds to the “Stay” cause. Goldman Sachs donated £500,000 to the Britain Stronger in Europe campaign, to be closely followed by JP Morgan, Morgan Stanley, and Bank of America.
Goldman Sachs also warned that leaving the EU could cause the pound to crash by as much as 20%. Japanese firm Nomura has warned that a Brexit could push the UK into another recession, and UBS estimated the loss to the British economy could be somewhere between 0.6% and 2.8% of GDP.
Following on from this, Deutsche Bank said it might move business away from Britain if the country chooses to leave the European Union, while HSBC hinted at the possibility of moving “jobs and activities to Paris”, despite only revealing yesterday that they would keep their headquarters in London.
Citibank was even starker with their warning: saying that a Brexit could cost Britain 75,000 jobs by 2030. This is especially serious if one considers that the financial sector is absolutely fundamental to the British economy; accounting for 8% of the country’s GDP, and 3.4% of all British jobs.
London currently is the world’s number one location for foreign exchange trades, and it has the fourth largest banks and third biggest insurance sectors globally, but all this could change suddenly if the EU referendum results in leaving the EU.
The motives of big banks are unlikely to sway the British public, as they are blamed for the 2008 financial crisis and for subsequent scandals over currency-trading and interest-rate rigging.
Many Brexit campaigners, however, say that the UK financial industry has “everything to gain” by leaving. Some bankers even favour leaving the EU, which does enforce a number of regulations that include a cap on bonuses, and a proposal to tax financial transactions.
The Leave.EU group remarked that “The UK’s position as a world leader in financial services is not dependent on its membership of the European Union. Outside of the EU, we would be better placed to compete with the challenge coming from cities such as Hong Kong and Singapore.” Indeed, at the beginning of January, Mark Astaire, one of Barclay Plc’s most senior investment bankers, said London would “continue to thrive” as a financial centre even if the UK was outside of the EU.
However, it does seem that the big international banks are not in agreement with him.
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