Goldman urges government to make Brexit transition deal

Media caption,

Brexit transition deal: 'The sooner the better' says Goldman exec

A "significant" Brexit transitional period needs to be agreed as soon as possible, to stop jobs being moved from the UK to Europe, according to the boss of Goldman Sachs International.

Chief executive Richard Gnodde told the BBC he was spending money "every single day" on contingency plans for Brexit.

The plans involve taking on more staff in Goldman's European offices to serve EU customers post-Brexit.

If a transitional deal was in place he could save that money, Mr Gnodde said.

Goldman Sachs employs 6,500 people in the UK.

'Buying insurance'

Goldman Sachs' most senior employee outside the United States said the longer he had to wait for the government to clarify its position, the less useful any transition period would ultimately be.

"The other way to describe the contingency plan is that we're buying insurance, so I'm spending money every single day to make sure that come March 2019 I'm open for business," said Mr Gnodde.

"If I knew today that we would have a significant transition period I could stop spending that (contingency) money because I know I would have time to transition my business.

"If they [the government] tell me in February 2019 there will be a transition period - well, I've already spent all that money, it's not much use to me. At that point the transition period doesn't really help - so the sooner we know... that's obviously helpful to us."

Goldman's Brexit contingency plans include adding hundreds of staff to its European offices - mainly in Frankfurt and Paris - to ensure it can continue to work with its EU-based customers after the UK leaves the EU.

These roles would be filled by both moving people from London as well as hiring locally.

Further additions or relocations would be considered over time depending on the final agreement between the EU and the UK.

Transitional period

Mr Gnodde said he expected London to remain a very important financial centre whatever the outcome of the Brexit negotiations.

"We will maintain a very significant presence in London. But if the rules require us to have more on the continent we will have more on the continent," he added.

Like all banks, Goldman Sachs submitted its Brexit plans to the Financial Conduct Authority (FCA) last week.

FCA boss Andrew Bailey said banks would need to know the government's position on any transitional arrangements by the end of this year, before contingency plans were put into action.

On Thursday, Prime Minister Theresa May chaired the first meeting of the new business council - a rotating forum of business leaders which is set to meet regularly to discuss the government's Brexit plans.

According to a Number 10 spokesperson, Mrs May talked about the need to have a transitional period, rather than an abrupt exit from the EU.

"On Brexit, the Prime Minister reiterated that the government's overarching goal is for a smooth, orderly exit culminating in a comprehensive free trade deal with the EU, with a period of implementation in order to avoid any cliff-edges," Number 10 said in a statement.