A campaigner arranges "#Lexit The Left Leave Campaign" leaflets on a table in Manchester, U.K., on Saturday, June 11, 2016. U.K. The pound tumbled the most in almost four months after the latest poll showed the campaign for Britain to leave the European Union took a 10 percentage-point lead less than two weeks before the referendum.Matthew Lloyd/Bloomberg
With less than two weeks to go before Britain's referendum on the country's future in the European Union, many people in London's financial sector are beginning to fret.
Support for pulling out of the EU appears to be rising, with one poll released on Friday showing support for Vote Leave at 55 per cent compared with 45 per cent for Remain. However, two polls published Saturday put the race much closer, with Remain ahead by two points in one and Vote Leave leading in another by one point.
Whichever poll is correct, the race is much closer than many expected, raising alarm bells across London's financial district, known as the City, which experts say would be harder hit by Brexit than any other segment of the British economy.
The City employs more than 330,000 people, generates about 10 per cent of Britain's gross domestic product and contributes 11 per cent of the country's tax receipts.
Brexit "would be very, very negative" for the City, said Rupert Harrison, a former chief of staff to the Chancellor of the Exchequer who now works as a macro strategist at BlackRock. "We would undoubtedly do less trade with our biggest market, particularly in financial services."
Mr. Harrison and others have pointed to the importance of the EU "passport" provisions that have helped make London a global financial powerhouse. Those rules mean financial institutions can set up in London under Britain's financial regulations, and then sell products or provide services in other EU countries without needing to be regulated anywhere else. As a result, more than 250 foreign banks have established branches in London to serve the EU and 40 per cent of Europe's wealth is managed out of the City. A vote for Brexit on June 23 could mean many of those banks moving to other EU cities.
A report by accounting firm PWC said that up to 100,000 jobs across Britain's financial sector could be lost as a result of Brexit. Last week, Jamie Dimon, chief executive of JPMorgan Chase & Co., which employs 16,000 people in London, said his firm would cut up to 4,000 jobs if the country left the EU, and Citigroup has said it would move some of its 9,000 employees to other EU countries.
Niamh Moloney, a professor at the London School of Economics who specializes in EU financial regulation, said the passport provisions have been developed over decades and are too good to give up. They would be "simply impossible to replicate" in a trade deal if Britain left the EU, she said.
Another concern for the City is the growing animosity in other EU countries, particularly France and Germany, about London's position as the financial capital of Europe when Britain doesn't use the euro. The European Central Bank recently pushed to have all euro-denominated currency trading done in a euro zone country, a clear shot at London which handles almost half of all euro-denominated trades. The British government blocked the move in the European Court of Justice, citing the EU's passport rules.
"If we left the European Union, we wouldn't have any of that to protect us," Mr. Harrison said. "So we would then face our biggest market on our doorstep being able to effectively pull that activity away from London and into the euro zone."
Not everyone is convinced Brexit would be bad for the City. Several hedge-fund managers and chief executives at some British brokerages have argued that EU regulations, such as the proposed financial transactions tax, hamper British firms.
"We should take all of these doom-laden projections with a pinch of salt," said John Mills, a London-based businessman who co-chairs Business for Britain, which is campaigning for Vote Leave. He acknowledged the City would face some costs as a result of Brexit, but insisted London's global position wouldn't deteriorate. He cited Singapore, Hong Kong and New York as financial centres that London should emulate.
"The jury is out on whether the economy would do well or not [under Brexit]," he added. "Some of the scare stories on the Remain side are grossly exaggerated and leave people more confused."