Treasury officials have privately warned that a “hard Brexit” deal in which the UK moved away from cooperation with the rest of the EU, including leaving the European single market and ending free movement, could cost the UK up to £10bn in lost taxes. According to the British Bankers Association of the £31.3bn tax contribution made by the UK banking sector, foreign headquartered banks aid just over half of the total at £16bn whilst UK headquartered banks contributed £15.3bn. The issue of passporting, the ability to do business with the whole of UK has long been a fear of UK banks and has lead foreign investors and companies to cancel plans to move to the UK whilst those already based here are looking to move out. This was highlighted last week when the chair of the Treasury Select Committee, Andrew Tyrie, stated that nearly 5,500 British firms hold at least one passport to do business in another member state of the EU or the wider European Economic Area.
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