Cameron’s Man in Brussels Says Brexit Would Harm City of London

The U.K. financial-services industry centered in the City of London would suffer if the country leaves the European Union, according to Jonathan Hill, Britain’s representative on the bloc’s executive arm in Brussels.

Leaving the EU single market completely could leave U.K. financial firms without the “crucial right to provide services anywhere in the EU from just one country,” Hill will say in a speech to be delivered in London on Monday, according to excerpts released by his office in advance. Without this so-called passport, companies would have to “set up a separate subsidiary with its own capital, subject to EU and any additional national rules,” he will say. “That is neither cheap nor simple.”

The warning from Hill, who was nominated to the European Commission by Prime Minister David Cameron in 2014, comes as the U.K. government steps up efforts to convince voters before next month’s referendum that their future lies in the EU. The Treasury said on Monday that a so-called Brexit would put tens of thousands of jobs in the financial sector at risk.

Hill, the EU financial-services commissioner, has previously commented on the U.K. referendum, taking aim at arguments made by campaigners to leave the bloc. In February, he said the idea that the U.K. would gain “greater control” by leaving the EU was a “chimera.”

The referendum campaign has hit high gear, with Bank of England Governor Mark Carney set to testify before the U.K. Parliament’s Treasury Committee on the issue on Tuesday. The Treasury issued its starkest warning yet about the dangers of a vote to leave, saying that it would risk causing a yearlong recession, sparking a decline in the pound and costing hundreds of thousands of jobs.

‘European Scale’

“It’s the single market that connects the U.K. as a financial center to the rest of the European economy” and “allows all these players to manage their business on a European scale,” Hill will say. “It gives them the flexibility to respond rapidly to opportunities in other parts of the single market. It means they can build a hub in Britain, and from here respond to growing financing needs elsewhere, like those of German manufacturers exporting to China.”

Hill will say that the U.K. enjoys “significant” benefits of EU membership. “In the EU, Britain’s biggest export earner, financial services, are flourishing, and if Britain remains there will be more and better to come,” he will say. “But if Britain leaves it is certain that there will be barriers to trade and that will damage the British economy, jobs and growth.”

To contact the reporter on this story: Patrick Henry in London at phenry8@bloomberg.net. To contact the editors responsible for this story: Rob Urban at robprag@bloomberg.net, Eddie Buckle, Thomas Penny