Brexit and the City

On 5 July 2017 Professor Andy Mullineux chaired a panel session on the impact of Brexit and The City. During the session, the panel debated whether a ‘soft’ or ‘hard’ Brexit is more likely given the current government’s position following the recent general election and the impact on the MFID, AFIMD and EMIR ‘passport’ systems and regulations.

With the potential for job losses as firms move to the EU to maintain the ‘passporting’ privilege, the panel also discussed the likelihood of where companies could relocate, however New York and London remained favourable in comparison to other global financial centres.

Patrick Artus explored whether Brexit would cause serious damage to the financial services sector in the UK, he assessed the importance of the UK financial sector compared to France and Germany and the UK’s share of financial activities across a range of EU financial markets. 

Collaborating with Nick Bloom (Stanford) and the Bank of England, Paul Mizen spoke about the results from conducting a monthly survey of Chief Financial Officers in UK (non-financial), the panel was polled regularly about their perceptions of business conditions and consequent decisions concerning hiring, investment and borrowing. 

The final speaker, Pierre Bollon outlined the scale and scope of the French asset management industry, noting its importance in the fund management sphere and assessing its competitiveness.  He particularly noted, its depth and talent pool along with the speed with which the French regulator (AMF, Autorité de Marchés Financier) can approve a new EU compliant product in France (in 17 days, ‘the fastest trade record in the world’).

Furthermore, the session looked at the perceptions of business conditions and the consequences on hiring, investment and borrowing and conclusions drawn included that due to Brexit being a major source of uncertainty sales and investments are likely to reduce whilst unit labour costs will rise. Re-location abroad is also more likely and it appears that firms are tending to be more negative than the general public when it comes to Brexit.

At the end of the session a ‘straw-poll’ of the audience indicated that more expected a ‘soft’ Brexit, with more trade access and less restriction on the movements of people, than a ‘hard’ Brexit, with less beneficial trade access and more restrictions on immigration from the EU27; but the largest show of hands was for the possibility of ‘no-Brexit’.