Photographer: Jasper Juinen/Bloomberg

Brexit Bulletin: Are Banks Bluffing?

The future of banks after Brexit might be a little more nuanced than they first said.

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Brexit will cause an exodus of bankers from the City of London. That’s the story the banks are telling. But are they bluffing?

They could be. Bloomberg’s Gavin Finch, Stephen Morris and John Detrixhe report today that forecasts for the potential flight of the financiers range from as many as 232,000 jobs lost to as few as 4,000.

The offices of global financial institutions, including Citigroup Inc., State Street Corp., Barclays Plc, HSBC Holdings Plc, and the commercial office block No. 1 Canada Square, stand in the Canary Wharf business, financial and shopping district of London, U.K., on Tuesday, Nov 29, 2016. The Bank of England added a new, higher bar to its third round of public stress tests. Photographer: Chris Ratcliffe/Bloomberg

The truth is nobody knows how many staff will head to the likes of Dublin or Frankfurt; so far any flows have been a trickle. What is clear is that executives and lobbyists want to frighten politicians into looking after the sector when negotiations between the U.K. and European Union begin.

“They are a bit like dogs backed into a corner and barking – it’s just noise,” said Jason Kennedy, CEO of Kennedy Group, a London-based recruitment firm.

“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.”

There’s plenty of mood music and positions being staked out, from players as big as JP Morgan Chase’s Jamie Dimon, who is reported to have told Prime Minister Theresa May a banking exodus would hurt sectors including restaurants and coffee shops.

As for where banks might relocate, one European banking boss quipped that the only way France would top his list would be if it was turned upside down.

Braced for Defeat

May’s government is readying to lose a vote in the House of Lords over the right of EU nationals to stay in the U.K., upsetting her Brexit timetable.

Labour and the Liberal Democrat opposition parties are uniting with rebels among May’s Conservatives to support an amendment to her EU withdrawal bill on Wednesday, likely delaying the legislation’s passage into law beyond next week. One senior official said there is no way pro-May Tories can overcome such an alliance.

Defeat will force the House of Commons and House of Lords into bartering over the law’s final wording, although May is still likely to meet her own deadline of triggering Article 50 by March 31.

Immigration Plan

On immigration, May is drawing up plans to protect banks and other key businesses from worker shortages after Brexit.

As Bloomberg’s Alex Morales and Tim Ross report, the government is said to be gathering information on migrant workers from multiple industries to ensure they don’t face staffing difficulties further down the road.

While May wants to trim annual net immigration from near record levels of more than 300,000 at the time of last June’s referendum, she knows she also needs to address the needs of businesses dependent on foreign talent.

Even as it announced plans on Tuesday to create a new 517-acre campus in the U.K., manufacturer Dyson said Britain lacks the skilled workers it needs for the high-end vacuum cleaners and hand dryers it produces. May called the expansion plan a vote of confidence in Brexit Britain. 

Brexit Ruffles Feathers

One major industry reliant on immigrants is farming.

Mark Gorton, joint managing director of Traditional Norfolk Poultry Ltd. (TNP), poses for a photograph at their farm in Shropham, U.K., on Friday, Feb. 3, 2017. Traditional Norfolk Poultry sells £30 million of free-range chicken annually to supermarkets across the U.K. and Europe from a farm in eastern England, where about 60 percent of his 250-person staff is from Eastern Europe. Photographer: Luke MacGregor/Bloomberg

Mark Gorton, joint managing director of Traditional Norfolk Poultry Ltd.

Eastern Europeans, for example, make up more than 60 percent of the 250 staff who work for Mark Gorton at his chicken farm in eastern England. 

“People have got the wrong impression that they are over here taking people’s jobs, because they’re not," Gorton told Bloomberg’s Stephanie Baker. “It’s physical work, manual work, repetitive work. You can’t find local people to do it.”

Gorton is the third business leader outlining his take on Brexit for a Bloomberg series on how business is preparing to manage as the Brexit process picks up speed.

Read more: On Brexit’s Front Lines

London Losing

London home sellers may be feeling the pinch of Brexit already as they are increasingly having to cut the asking prices of their homes amid political uncertainty.

“Price cuts seen in prime central London in the immediate aftermath of Brexit are now filtering through to outer boroughs,” said Savills residential research director Lucian Cook.

With high values also damping demand, the percentage of sellers reducing prices in January rose in all but two of the capital’s 33 boroughs compared with July, according to Zoopla.

Still, a report released overnight by Knight Frank shows the super-rich continuing to flock to London. The number of ultra-wealthy people living in the capital – those worth $30 million or more – is expected to climb by 30 percent to 6,058 over the next decade.

Read moreExplore our latest snapshot of the city’s housing situation, based on Land Registry figures released on Tuesday.

Brexit Bullets

  • Nissan could face a £500 million hit to profit should the U.K. be subjected to “pretty disastrous” World Trade Organization tariffs, according to Senior Vice President Colin Lawther
  • Bank of England Deputy Governor-designate Charlotte Hogg warns of the potential for a sharp drop in consumer spending
  • Brexit Secretary David Davis tells colleagues to prepare for “unlikely scenario” of failure to reach a deal in the “most important peacetime” negotiation
  • Ex-Chancellor George Osborne says leaving the single market may be “single biggest act of protectionism in history”
  • Hesse Premier Volker Bouffier said prospects for a Deutsche Boerse-London Stock Exchange tie-up “totally changed” after Brexit vote
  • Scottish First Minister Nicola Sturgeon says another vote on independence may be inevitable
  • House of Lords committee say Gibraltar must retain a “free-flowing” border with Spain
  • Oxford Economics estimates introducing customs checks would reduce the level of U.K. gross domestic product by 0.7 percent to 1.3 percent in 2030
  • London Assembly Economic Committee warns against hurting capital by limiting immigration
  • The U.K. Independence Party is suffering internal strife which may result in the expulsion of its only lawmaker in the House of Commons
  • U.S. President Donald Trump delays visit to the U.K. until October, The Sun reports
  • Pro-Brexit investor Terry Smith moves to Mauritius to escape “noise” of London, says The Times

And Finally…

Brexit is going to do wonders for the pineapple jam industry. So declared Foreign Secretary Boris Johnson on Tuesday as he hailed the “the miracle of globalization combined with British branding genius.”

“We not only, every night, import pineapples from Ghana but guess what? We take those pineapples and we alchemically transform them, and we actually export pineapple jam to America. Can you believe that? Americans. And that’s even before we’ve done a free trade deal. It is an incredible fact that we have a trade surplus running with the United States of more than £30 billion. But they still don’t buy our beef, and indeed they refuse to eat haggis from Scotland so far. I think you’ll agree with me that if they can eat pineapple jam, they can certainly manage haggis.”

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