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Financial services in the UK will not suffer dramatically even if the country crashes out of the EU without a trade deal, a leading US law firm in the City of London has argued.
The upbeat message from the Square Mile office of the New York firm Shearman & Sterling flies in the face of warnings yesterday from the Bank of England.
Bank officials said that up to 75,000 jobs could be lost over the next three to five years if the UK left the bloc without a deal on financial services.
However, Barney Reynolds, a partner at Shearman & Sterling, argued that the impact of a “no deal” Brexit was being overegged.
In a paper published yesterday, Reynolds said that the “loss of passporting rights and other freedoms under EU treaties should neither frustrate existing contracts nor render the performance of existing cross-border UK-EU contracts illegal nor cause them to be void or voidable”.
According to the firm, contractual rights will be protected by the right to property under the European Convention of Human Rights, the EU Charter of Fundamental Rights and the doctrine of “acquired rights” under public international law.
Those protections “will shield many contracts entered into between UK and EU-27 parties before Brexit and should therefore permit such contracts to be performed to their full extent in a hard-Brexit scenario”.
The paper argues that those human rights concepts will mean that, “despite the removal of the financial services passport upon Brexit, any licensing requirements that spring into force on Brexit for parties performing existing contracts — and any other legislative changes that frustrate contracts — would be contrary to the human rights and other protections afforded to contracts entered into before Brexit”.