The “Hard Brexit" could cost the British financial firms $48 billion05.10.2016

The UK financial industry could lose up to 38 billion pounds ($ 48.34 billion) in revenue in the case of the so-called ‘hard Brexit’, which will lead to the country’s limited access to the single market of the European Union, says a company in its report.

If the British financial firms will lose their right to freely sell their services throughout Europe, the number of jobs in the industry could be reduced by 75 000, and the government will lose up to 10 billion pounds of income from taxation, says the report of the consulting company Oliver Wyman.

This report is one of the first studies describing the effects of the UK’s decision to leave the EU on the basis of the June referendum particularly for financial companies.

Sources familiar with the situation, reported that the results of the study were presented to the Ministry of Finance of the United Kingdom and other agencies.

Recently, there is increased speculation that the financial sector, which includes retail banks, asset managers, insurance companies and investment banks, will lose access to the single market on the basis of negotiations for separating the Britain from the EU.

"The positive result of the negotiations, which will be beneficial for both the United Kingdom and the EU, would lead to minimum destabilization of the industry and will be for the benefit of customers, thus being in everyone's best interests", - said Hector Sants, vice-chairman of Oliver Wyman and the former head of the British financial regulator.

The study was conducted on behalf of a leading lobby group in the industry – TheCityUK.

Britain's Ministry of Finance did not respond to a request for comment.

The future of London as a European financial center will be one of the most important issues in the negotiations of Britain with the EU, as the EU is largest segment of British exports and the main source of tax revenues.

In the UK, the financial services sector accounts for 190-205 billion pounds of annual revenue; it employs about 1.1 million people, the report says. The industry pays approximately 60-67 billion pounds in taxes.

The report reflects the effects of two different scenarios of Brexit.

In the worst case, international banks completely lose access to the single market, known as "hard Brexit", which will lead to a drop in income by 32-38 billion pounds and would jeopardize 65.000-75.000 jobs, the report said.

If Britain is to maintain access to the European Economic Area on the likes of current conditions, the financial industry can lose only 4,000 jobs and about 2 billion pounds of revenue.