Brexit 'crunch time' for City of London, says group

It is "crunch time" for UK finance firms in Brexit negotiations, an influential lobby group has said.

British businesses and the economy as a whole need a transition period as the UK leaves the European Union, The City UK said.

Economist and former Brexit campaigner Gerard Lyons also said a transition period would be good for Britain.

The UK government said it was making sure business voices were heard in the negotiations.

On the eve of Prime Minister Theresa May's much-anticipated speech on Brexit in Florence, the lobby group warned the UK is in danger of losing its place in the financial world much in the same way the Italian city did after the Renaissance.

• Florence - a warning from history

The City UK said companies are already moving jobs overseas as Britain prepares to leave the European Union, and further faltering in Brexit talks will lead to irreversible decisions.

"For our industry, this really is crunch time," The City UK chief executive Miles Celic said.

Around 10,000 finance jobs will be shifted out of the UK or created overseas in the next few years if Britain is denied access to Europe's single market, a Reuters survey has suggested.

Business 'needs clarity'

The financial sector wants clarity.

"Many firms are already moving parts of their operations out of the UK and Europe. When they've gone, it's hard to see them coming back," Mr Celic said.

"Even if the UK and EU agree the best possible Brexit deal by 2019, without urgent clarity on transitional arrangements, business will assume the worst and act accordingly," he said.

A spokesperson for the government said it is working with the business community to give it "as much certainty as possible as we move through the exit process."

"We have been clear that we believe a time-limited, implementation period is in the interests of both the UK and the EU and that negotiations on the future partnership should begin as soon as possible."

"We have intensified our engagement with the business community to ensure their voice is heard and reflected throughout our negotiations giving them as much certainty as possible as we move through the exit process," he added.

Transition period

UK economist and writer Gerard Lyons, who campaigned for Brexit, told the BBC that a temporary transition period would be good for the UK to avoid a "cliff edge".

However, he said that not all business fears were justified. "Sometimes contingency planning is too extreme," Mr Lyons said, adding that "regulators can't determine where the market goes to."

He said that it would not be in the best interests of the UK or the EU for London to be dismantled as the major European financial hub.

"It is non-European business that will benefit," Mr Lyons said.

Having so many financial services in London increases competition and drives down prices, and fragmenting that market would hand the prize to a financial centre outside Europe such as New York or Singapore, he added.