UK Financial Professionals Increasingly Expect “Hard” Brexit
Financial industry professionals living in the UK are less confident that the country will achieve a “soft” departure from the European Union than they did in 2017, with a slight increase in the number predicting Britain will leave the bloc with no deal.
Separately, a UK wealth management lobby welcomed official calls to enable continued migration to the UK without discrimination against those from outside the EU.
The findings come from CFA UK and a poll of 800 of its members. (The organisation is part of the CFA Institute.) Whereas 67 per cent expected a soft Brexit this time last year, just 58 per cent do today. The number that expect a hard Brexit has increased from 17 per cent to 22.5 per cent and the number of respondents that have no view has also increased from 16 per cent to 19.5 per cent. UK respondents are most likely to expect a hard Brexit (26 per cent) – the term describing a departure with no deal and reliance on World Trade Organisation upper limits on tariffs.
EU respondents are least sure about the outcome (24 per cent) and other international passports are most likely still to expect a soft Brexit (72 per cent).
The poll was issued in the same week as UK prime minister Theresa May haggled with EU member countries over her government’s plan to adopt certain EU Single Market rules as part of a settlement. Her “Chequers Plan” – named after her official residence in Buckinghamshire where a set of proposals was put forward to cabinet colleagues – has been criticised by some pro-EU members of parliament as being unrealistic, leaving the UK with no influence but having to comply with EU red tape. MPs who want a more complete break from the EU, such as former foreign minister Boris Johnson and ex-minister Steven Baker, have condemned May’s plan for giving the UK Brexit “in name only”.
Among other parts of the CFA poll, it was revealed that the number of investment professionals who expect to leave the UK has risen by 9 per cent to 11 per cent, but this is based on a large increase in the number of British investment professionals who now expect to leave (9 per cent up from 5 per cent). The number of EU investment professionals that expect to stay has actually increased (from 43 per cent to 49 per cent) and there has also been a slight increase in the number expecting to leave (16 per cent last year rising to 17 per cent this year). Overall, the number expecting to stay in the UK has increased from 68 per cent to 69 per cent.
The survey authors said more people feel that their jobs are at risk from Brexit. Last year, 60 per cent of UK respondents felt that their jobs were safe. Now, just 54 per cent feel the same.
More than three quarters of all respondents (77 per cent) said that Brexit made the UK less competitive as a financial hub.
The impact – positive or negative – of Brexit and how it works out in practice is a hotly-disputed topic. Firms such as banks, asset managers and brokerages are seeking as much clarity as possible to judge whether or when to adjust operations, such as whether they should build subsidiaries in the EU to ensure continued market access. A vexed issue is “passporting” – whether financial services run out of London can be sold across the EU, as at present, post-Brexit, without costly registration and approvals. Among recent developments, UBS, the Swiss bank, said it was relocating its European headquarters to Frankfurt, Germany, after Brexit. Debate continues over how large any impact will be. With technologies such as blockchain and AI potentially affecting many types of jobs, it is arguable that technology, rather than Brexit, will have a bigger impact on financial employment in the next few years.
Earlier this week the Migration Advisory Committee, an official body advising policymakers on issues such as immigration, said that lawmakers should not give preference to EU nationals for visas following Brexit.
The Personal Investment Management and Financial Advice Association has welcomed the Committee’s report – with one caveat.
“PIMFA welcomes the publication of the MAC Report with its emphasis on retaining as much freedom as possible for the movement of highly skilled labour, and recommending the abolition of the Resident Labour Market Test, thus permitting the continued inward flow of workers bringing economic benefits to the UK,” it said.
“As part of this report, PIMFA would like to have seen the MAC Report reflect the fact that we advocated, in our response to the Call for Evidence, a certain preferential treatment for EEA [European Economic Area] citizens and would hope that the policy formulations resulting from the MAC Report will take this into account,” it added.