The financial services industry is already planning to move business overseas due to the uncertainty of the Brexit process, the head of the British Bankers' Association has warned.
Anthony Browne blamed fears that European Union (EU) politicians will want to erect trade barriers in an attempt to weaken the City of London during the Brexit negotiations for the planned moves.
Smaller banks could begin moving some operations overseas within weeks, with larger institutions following in the first few months of 2017, he predicted.
"Their hands are quivering over the relocate button," he said.
Writing in The Observer, he said: "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.
"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.
"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 financial services firms based in the UK to operate throughout Europe without seeking separate authorisation.
He warned that in European capitals and among British Eurosceptics "the rhetoric is hardening" and politics could trump the economic advantages of allowing the present system to remain relatively untouched.
"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.
"From a European perspective, this would be cutting off its nose to spite its face.
"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."
Banks have called for transition arrangements to be put in place after the UK leaves the EU but the uncertainty over the future - with years of negotiations with Brussels ahead - has left them with little option but to take steps to protect their futures.
Mr Browne said: "Banks might hope for the best but have to plan for the worst.
"Most international banks now have project teams working out which operations they need to move to ensure they can continue serving customers, the date by which this must happen and how best to do it.
"Their hands are quivering over the relocate button. Many smaller banks plan to start relocations before Christmas; bigger banks are expected to start in the first quarter of next year.
"London will survive as a global financial centre. Finance is inventive and will find a way through.
"But putting up barriers to the trade in financial services across the Channel will make us all worse off, not just in the UK but in mainland Europe."
A government spokesman said: "We are determined to maintain the City's leading position as one of the key centres of global finance as we make a success out of Brexit.
'"The Government is keenly aware of the importance of the financial services sector to the UK economy.
"DExEU (Department for Exiting the European Union) and HMT (HM Treasury) 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."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel