Amid growing fears over the impending Brexit negotiations, while smaller banks are making plans to get out before Christmas., Britain’s biggest banks are preparing to relocate out of the UK in the first few months of 2017.
Warning that “the public and political debate at the moment is taking us in the wrong direction”, the dramatic claim is made in the Observer by the chief executive of the British Bankers’ Association, Anthony Browne.
Reassurance that Britain was determined to secure the status of the City of London was offered last week by Brexit secretary David Davis and the chancellor Philip Hammond, a source close to Davis said.
However, a hammer blow to any chance of retaining the present terms of trade for banks, particularly given the bellicose rhetoric of major politicians on the continent, widely recognised among officials is the government’s stated intention to take control of the freedom of movement into the UK.
The French president François Hollande is among those who have insisted in recent weeks that hard Brexit will mean “hard negotiation’ and that Britain will need to “pay the price” of leaving even though the so-called passporting rights for members of the single market allow UK-based banks to offer financial services to companies and individuals across the EU unimpeded.
Tariff would be potentially reintroduced and non-tariff restrictions imposed on British imports and exports by a hard Brexit which would involve the UK leaving both the single market, a central pillar of which is freedom of movement.
Recognition that “putting up barriers to the trade in financial services across the Channel will make us all worse off” need to be made by both British and European politicians who appear to be pursuing “anti-trade” goals, Browne warns.
Browne further warns the EU that banks based in UK are currently lending £1.1tn, therefore “keeping the continent afloat financially”, and that this arrangement is at risk. His organisation has been in intense negotiations with the government.
the current trajectory threatens not just tariff-free trade but the legal right of banks to provide services and banking is the country’s biggest export industry by far, he writes about Britain’s position.
“Most international banks now have project teams working out which operations they need to move to ensure they can continue serving customers, the date by which this must happen, and how best to do it,” he says.
“Their hands are quivering over the relocate button. Many smaller banks plan to start relocations before Christmas; bigger banks are expected to start in the first quarter of next year,” he added.
Speculations of an “equivalence” deal with the EU, under which the regulatory systems are recognised by both parties through a one-off agreement, for the city were making the rounds and aources close to Davis dismissed those speculations. Such a deal would not be enough to stop banks deserting Britain even though some Brexiters have made such an argument, Browne writes.
“On this side of the Channel, some high-profile Brexiters have poured scorn on the idea that we need passporting at all and that other regimes such as ‘third country equivalence’ will do.
“But the EU’s equivalence regime is a poor shadow of passporting – it only covers a narrow range of services, can be withdrawn at virtually no notice, and will probably mean the UK will have to accept rules it has no influence over. For most banks, equivalence won’t prevent them from relocating their operations,” he writes.
(Adapted from The Guardian)
Categories: Economy & Finance