We’ve already seen various aspects of Project Fear, the over-the-top predictions of doom about voting to leave the EU, come unstuck. Most famously, the Treasury’s forecasts of immediate recession and huge job losses after such a vote have turned out to be the direct opposite of what’s actually happened.
Another part of Project Fear which appears to be unravelling focuses on City jobs. A variety of specific numbers were flung about during and since the referendum campaign – as recently as June, the LSE’s Brexit unit published a warning from the former finance minister of Bulgaria that 17,000 jobs were set to be lost in investment banking alone, never mind in other sectors.
It was therefore fascinating to see a new analysis published this week by none other than the Financial Times, that bastion of pro-EU concern, which found that such figures had been drastically overblown:
‘The UK’s biggest international banks are set to move fewer than 4,600 jobs from London in preparation for Brexit — just 6 per cent of their total workforce in the financial centre — according to Financial Times research. The FT analysis contrasts with consultants’ original claims that tens of thousands of jobs could move from London after Brexit…Some bankers say the lower estimates emerged as they thought through how many jobs and operations would need to move to the EU if the UK loses access to the bloc’s single market.’
Nor are these rounding errors – some institutions once talked of thousands of job losses but are downgrading to the low hundreds. Quality, as well as quantity, is being revised, too – where some predicted their major talents and big revenue-raisers would move, they now talk of technical and administrative functions shifting instead.
That retreat from dire forecasts to far more modest figures is only half the story, too.
Remember the so-called “point of no return”? This was the idea that if there was no confirmed and finalised Brexit and future trade agreement in place by the first quarter of 2018, then banks and other financial institutions would have to plan irreversibly for a worst-case scenario. So in the absence of a swift outcome to the talks, the losses to the City would be the worst imaginable, and a good deal later on could do nothing to change that outcome.
Well, it turns out that wasn’t strictly true, either. Step forward, yet again, the Financial Times, to debunk yet more of the alarmism previously featured in its own pages:
‘‘Point of no return’ red line for early 2018 is being erased…Eighteen months after the Brexit vote, bankers have given up hope of anything happening sharpish. There is a realisation that if they stick to the “sort it by March 2018 or else” rhetoric, their voice could become impotent after that date. (“Why bother engaging if they’ve already made up their mind?”) Banks have also gone far enough into their internal Brexit planning to know how financially and administratively painful it would be to move big parts of their main EU business from London to the continent or Ireland.’
That’s no guarantee of what any eventual deal will or will not provide, of course. Nor is it a guarantee that there’ll even be a deal. But yet again there’s a retreat from some of the most dire claims that were previously made – and in some quarters were unquestioningly believed. It’s welcome news that these exaggerations are being revised, though it would have been better not to have issued them in the first place. Perhaps we should take other doom-laden claims with a fistful of salt, too.