• Thursday, September 28, 2023
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JP Morgan issues bleak warning on Brexit damage

JPMorgan Chase’s chief executive has added to the pressure on UK prime minister Theresa May by warning that Brexit could be “tough for the British people”.

Jamie Dimon said the UK economy could suffer such a significant downturn after it leaves the EU that it “will have an impact on global growth, and so Brexit could hurt everybody a bit”.

Coming a day after two senior cabinet ministers resigned in protest at Mrs May’s Brexit negotiating plan, Mr Dimon’s comments underline how business leaders are losing patience with the lack of progress in deciding the terms of the UK’s exit from the EU.

“We still do not fully understand what Brexit is, its economic effects and how its effects will play out: these are huge question marks that will stay for a long time,” Mr Dimon told the Italian newspaper Il Sole 24 Ore.

“I do think that, because of Brexit, some businesses across the financial and manufacturing sectors will be relocating from the UK to other parts of Europe, including Italy,” he said.

JPMorgan last week became the latest big bank to begin moving staff out of London ahead of Brexit, telling its UK employees that “several dozen” of them had been “asked to consider relocation from the UK” around the end of this year.

Mr Dimon had a message for the new populist Italian government, warning of the dire consequences of attempting to withdraw the country from the eurozone.

“Because of the way it has been designed, the European Monetary Union would be hard to reverse without causing catastrophic events,” he said. “This does not mean that Europe should not fix itself. There are many regulatory issues that remain to be solved, and the fact that Brexit happened should make the dialogue between European countries easier.”

The JPMorgan boss also had stern words about the potential “bad outcome” of US president Donald Trump’s threats to impose tariffs on imports.

“President Trump has been warned about this by the business community in the US,” he said. “The impact of tariffs on trade can offset the benefits that US growth is having from tax reform, but we do not yet know to what extent.”

Mr Dimon has previously warned that JPMorgan’s 16,000-strong UK workforce could be reduced by 4,000 after the UK quits the EU.

JPMorgan had banking licences in Frankfurt, Dublin and Luxembourg and was adding staff in other locations including Paris, Madrid and Milan, it said in a memo to UK staff last week.

Most big financial groups are trying to limit the disruption of Brexit and plan to move at most a few hundred jobs each from London to other European cities in the first phase. However, executives warn that they may later be forced into more radical shifts in a hard Brexit scenario in which the UK leaves the EU without any agreement on trade.