With uncertainty surrounding the negotiations on the UK’s exit from the EU, financial services firms in London, across Europe and all over the world still have no clear answers as to what the situation will be post-2019. After the UK becomes a third country, the EU will lose its main financial markets centre, and Brexit will mean the end of City of London firms’ automatic license to do business throughout the EU, the so-called passporting rights.
The potential impact of Brexit on financial services in UK was discussed this week (22 November) in Brussels at a seminar organized by the European Movement International (EMI) and ACCA (Association of Chartered Certified Accountants)
“The signal Brexit sends to Britain’s global partners can only be negative,” said Jo Leinen MEP and President of the EMI said. “It adversely affects the UK’s economy, hurts its main industry, weakens its standing in the world, diminishes its claim of being an open, trading nation and reduces its influence.”
The panel discussion confirmed that fragmentation and uncertainty are the enemies of financial markets. All speakers stressed the importance of early clarity on transitional arrangements and contractual continuity, so businesses and the financial industry can plan accordingly.
There was general consensus on that fact that we still don’t know how the post-Brexit world will look like. The EU-27 will be adjusting to the new reality and will need to develop its capital markets capacity to keep its competitiveness and attractiveness.
According to MEP Richard Ashworth, the next two weeks, preceding the December EU 27 Summit, will be crucial for deciding the future new relationship that the UK will have with the EU.
To move to phase two of the negotiation, both the EU and the UK agreed at the outset that sufficient progress needs to be made on three main issues: citizen rights, Northern Ireland and the financial settlement. “There is still work to be done.”
Anthony Walters, Global Head of Public Affairs at ACCA concluded: “What was clear from the discussion is that financial services are desperate to get clarity on transitional arrangements. However, the value of a transition period is fast diminishing with financial services firms already starting to put contingency plans into action.”