Hope for a ‘soft Brexit’ is declining among financial sector leaders
Britain is in store for a hard Brexit according to leaders in the UK’s leading Prepaid financial services and FinTech businesses. Their main concern relates to the lack of access to markets in the EU. The Prepaid financial services sector is represented by the Prepaid International Forum (PIF).
Research carried out by PIF found that 58 percent of its UK members are predicting a hard Brexit. They also found that 66 percent of its members believed that the UK will lose it access to ‘financial passporting.’ Passporting is a legal mechanism that allows financial services companies, which are based and regulated in one EU country (or the EEA) and authorised under one of the EU’s single market directives, to do business in the other member states.
- 58% Expecting a ‘Hard’ Brexit
- Two-Thirds Expect Access to EU Markets to be Negatively Affected
- 75% Reviewing Options to Move At Least Some Operations Out of UK
Alastair Graham, spokesperson for PIF, says:
“Immediately after the Brexit vote, there was a general belief that common sense would prevail, and the reciprocal access to financial services between the UK and EU would remain open to the mutual benefit of both sides.
“However, as the negotiations have continued, this optimism has faded considerably. To the extent that now most are expecting and planning for the worst possible outcome for financial businesses.”
Ireland looks to be the most likely beneficiary for jobs and income exiting the UK, with 30% of leaders surveyed saying this would be the most likely country where they will relocate all or some of their operations.
“The UK is a significant market for FinTech and Prepaid financial services and is the home of much of the EU’s innovation and growth for this sector. However, growing businesses cannot afford to become isolated from the opportunities across the EU.
“The lack of clear signals from either side in the negotiation has seen optimism fade and companies are now actively preparing for the worst.
“Speaking to members for this research, it is clear that to maintain passporting rights most are planning to hold offices in both the UK and EU after Brexit, which for some will come at a significant cost.
“The destination of their main office is being determined by a range of factors, including access to expert staff, corporation tax, the cost of living and other expenditures.
“For these reasons, many are looking to relocate their main operations to countries where businesses can operate from a lower cost base than the UK. As well as Ireland, eastern Europe is emerging as a popular option, with Lithuania and Estonia mentioned, alongside options such as Ireland, Luxembourg and the Netherlands.”
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