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As Theresa May’s government prepares to activate Article 50 and start the two-year process of leaving the EU this month, senior City financiers are already drawing up ways to protect the sector’s interests.
“The challenge for the UK is not to assume it’s unassailable,” said John McFarlane, chairman of Barclays and TheCityUK lobby group. “Advantage needs to be renewed.”
Mark Hoban, a former Treasury minister, has been asked by TheCityUK to work with his former employers PwC to produce a report entitled “Vision 2025” examining ways to enhance the UK financial services industry after Brexit.
Executives met last week to thrash out ideas, which include making skilled immigration easier, particularly to encourage the development of the financial technology “fintech” sector, and regional supervisory offices.
“There is absolutely no appetite for a regulatory bonfire,” said Miles Celic, chief executive of TheCityUK. “But there is space for a tonal shift.”
As an example, he said Solvency II rules for insurers could be adjusted to encourage infrastructure investment. Others would like the EU’s widely loathed bonus cap to apply only to UK banks’ operations in Europe.
“There needs to be a tangible, compelling economic or collateral reason to be here or to do business here, rather than somewhere else, and this needs to be renewed continually,” said Mr McFarlane.
Big banks, insurers and asset managers with operations in the UK have drawn up contingency plans to cope with a “hard Brexit” that takes the UK out of the EU single market and would make them unable to do business across Europe from Britain. Many are preparing to set up EU headquarters in Frankfurt, Dublin, Paris, Luxembourg or Amsterdam. Most Wall Street bosses believe New York will be the big winner from Brexit, especially because US President Donald Trump has promised to cut taxes and regulation. Meanwhile, banks, including HSBC and Credit Suisse, are shifting resources to faster-growing Asian markets and many have already moved back-office jobs from London to cheaper locations.
Full article on Financial Times (subscription required)