.comment-link {margin-left:.6em;}

Wednesday, August 17, 2016

Reality bites for post-Brexit UK

There are many who voted for the UK to leave the European Union in June as protest against the two opposing groups of politicians who they saw as lying to achieve their chosen outcome. Alas, despite being accused of promoting 'Project Fear', it is the remain campaign whose claims are being proven to most accurate.

The latest sign that Brexit will be bad for the health of our economy is the news that big investment banks with their European headquarters in London will start the process of moving jobs from the UK within weeks of the government triggering Brexit. That is a faster timeline than their public messages of patience imply.

The Independent reports that dismayed by the lack of a clear plan to protect the UK’s status as a global financial hub, executives are planning for the worst. They believe that they will lose the right to sell services freely around the European Union from the City.

The big four are now in a race to secure the best European office space and accommodation for thousands of workers they plan to eventually move from the UK. They want new or expanded offices set up in Europe before the end of the two-year Brexit negotiation period:

While UK Prime Minister Theresa May has said she will fight for the City of London to retain its passporting rights, bankers and lawyers say she faces an uphill battle trying to win concessions from EU partners still smarting from the outcome of the 23 June vote.

Bank executives are privately discouraged that seven weeks after the referendum, the ministers in charge of negotiating the best deal for the UK believe they can retain the benefits of being in the single market without accepting the free movement of EU citizens, the people said.

Banks are in a race against each other to secure the best office space and accommodation for the thousands of workers they would eventually move from the UK, given the limited number of suitable destinations in those cities. They also want to be first in line with the local regulators, who will likely struggle to cope with an influx of investment banks asking permission to set up shop.

The paper says that an isolated London would be a particularly acute problem for Wall Street banks given the significant revenue they generate from EU clients. The think tank New Financial, say that EU staff from 87 per cent of US investment banks are located in the UK, which is also home to 78 per cent of the region’s capital markets activity:

Before the referendum, Jamie Dimon, JPMorgan chief executive said he would relocate as many as 4,000 employees to the continent after Brexit.

Morgan Stanley may move as many as 1,000 employees out of the UK, while Goldman Sachs Group and Citigroup indicated they would also shift people abroad. European banks including HSBC and Deutsche Bank said they may have to move people or activities to France and Germany.

We reap what we sow and none of it is good news for the UK economy.
I suspect a rebalancing of the UK economy would be welcome by many on the Remain as well as Leave side of Brexit, but it’s the almost total reliance of the UK on the City of London and the total lack of rebalancing that’s already doing significant economic damage and will eventually filter through to Wales in the months and years to come with less Barnett grant and UK Gov investment because of less tax take.

It also raises the small matter of what London becomes if it’s not a global financial hub, what’s its role post Brexit, can it survive on tourism alone?

Unfortunately, like the article they are not problems Leavers care about, the economy is tanking, the pound is at a historic low, thousands of jobs will be lost, business and consumer confidence is low and business investment in on hold, but so what they won and sod everyone else.

Welcome to EnglandandWales land, a racist backwater dreaming of former Empire glory.

Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?