03 October 2016

Bloomberg: Banks to miss out on special favors in May’s Brexit plans

According to three senior figures in May’s administration, the government will refuse to prioritize the protection of the sector after the U.K. has left the European Union. Her team has also dismissed the key business demand for an interim deal with the EU to help ease the transition out of the bloc, one of the people said. All asked not to be named because the information is sensitive. [...]

In her speech on Sunday to the Conservative Party conference in Birmingham, central England, May didn’t refer to the City of London, instead saying only that she wants the Brexit deal to involve free trade in goods and services as well as cooperation on law enforcement and counter-terrorism work. [...]

May told the BBC before her speech that she wants to achieve the right deal for business in her Brexit negotiations. “We owe it to businesses, people who want to invest in the United Kingdom for the future to actually ensure that we get the right deal for trading goods and services,” she said.

Shock Realization

Business leaders are failing to recognize that the new prime minister has a different view of the City of London from Cameron, the people said. May does not simply accept what the City says in the way that Cameron and his former chancellor, George Osborne, tended to do, according to one person. That realization will be a shock to some in the City, the person said.

Financial-services firms risk damaging their relationship with lawmakers by repeatedly complaining about the impact of Brexit on their businesses and threatening to move their offices out of the U.K., one senior figure said, dismissing as a joke the idea that London-based financial-service companies would all move to Frankfurt, Paris or Dublin. [...]

Inside the government, officials believe the impact of Brexit on the City will be to cut the size of a few bankers’ bonuses, with only a few hundred jobs moving elsewhere in Europe. Voters would welcome rather than complain about such an outcome, one of the people said. [...]

British government officials rejected the idea of seeking an interim deal in blunt terms.

Steve Baker, a member of May’s Conservative Party who serves on Parliament’s Treasury Committee, said the finance industry must adjust to the new post-Brexit reality.

“Given the obvious steel in our new prime minister, the City would be ill-advised if they did not accept the new political reality,” he said in an interview. “For a very long time, the City is seen as having enjoyed a privileged status and London has ended up becoming a kind of city-state, separate from the rest of the nation. Actually we have all got to go forward as one United Kingdom -- and that is bound to mean change.”

Full article on Bloomberg

© Bloomberg