'Get ready for London job moves' Lagarde tells EU

European financial centres must gear up for a mass relocation of companies and jobs from London after Brexit, according to the International Monetary Fund chief.

London city centre
Christine Lagarde told an Irish Central Bank conference in Dublin that the EU27 needed to enhance its regulatory and supervisory capacities to cope with the likely influx of firms from the City of London.

IMF calls for regulatory and supervisory improvements in Europe

“In the near-term, it is critical to ensure that regulatory and supervisory capacities are prepared for the influx of financial firms that will move to continental Europe – and Ireland – as a result of Brexit,” Ms Lagarde said.“The euro area needs truly integrated financial and capital markets that allow companies to raise financing across borders more easily and support investment.“We meet at a moment when the EU and euro area are in the midst of difficult decisions about their future. Populist movements – from Brexit to the recent Italian elections – have called into question the value of European integration.”
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Ms Lagarde accepted that integration brought its own problems. “Several of the countries hit hardest during the global financial and euro area crisis saw their income growth fall significantly behind that of their peers,” she said, noting that many countries were only now recovering to pre-crisis levels.“It has been a complicated journey, full of difficult moments – but in each step, we have learned valuable lessons at the age of 20, the euro area is more mature – battle scarred yes, but also stronger and ready to move forward.”Ms Lagarde told the conference that she believed the EU should take to introduce greater fiscal risk-sharing while reducing underlying fiscal risks. “Greater risk-sharing combined with larger national buffers would allow countries to avoid having to raise taxes and cut spending when the next downturn comes,” she said.

IMF proposes rainy-day fund

The IMF recently introduced proposals for a so-called rainy-day fund for the euro zone: a so-called central fiscal capacity. Ms Lagarde said such a fund could act as a buffer against future shocks, but acknowledged there were other proposals on the table.“But no matter which proposal is eventually adopted, every country has a responsibility to comply with common fiscal rules and reduce public debt in places where it is too high,” she said. Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Global Mobility Toolkit download factsheets resource centreAccess hundreds of global services and suppliers in our Online DirectoryClick to get to the Relocate Global Online Directory