London financial center sees hope as global ‘utility’ after Brexit
3 August 2016. By John Rega
Since Britain called its referendum on EU membership, the financial sector has argued mainly for defending what it has now.
TheCityUK industry group has partially channeled that argument, in its post-exit wish-list published today. But with an important caveat: Keeping what the City has depends on what European negotiating partners are willing to concede.
The financial center’s lobbying group is at its most convincing, in its report on life after Brexit, where it argues for what the UK can do outside the London-vs-Brussels paradigm to encourage innovation and new services based on global regulatory approaches.
TheCityUK calls for the UK to open up further business channels with the world while developing its domestic economy — particularly outside the capital — with better infrastructure, worker skills and technological innovation. With government help, the financial center should expand its services on offer, the group says.
The 60-page blueprint is well timed, with the government of Prime Minister Theresa May still considering its negotiating stance. And it does well to describe many of its points as priorities for competing on the world stage, regardless of a Brexit.
TheCityUK advocates that Britain take the lead in developing global standards in a slew of areas: data standardization and reporting, market information, database management, cloud computing and security.
With that expertise, the country can build up compliance functions and other back-office type professional services needed by the financiers and business in general.
In what almost sounds like a military-industrial complex for finance, the report calls for “Partnering with the government and regulators to establish industry utilities in priority areas of regulatory compliance, such as cyber risk, anti-money laundering and financial crime.”
EU companies, regardless of the regulatory regime, will be attracted to those services, the group argues, even as Irish and continental governments vie to win that business for themselves.
The UK also has an opportunity to promote English law as the premier medium for global business dealings, further cementing demand for British services, TheCityUK says.
The industry group does revert to defensive mode in some high-profile arguments. It calls on the government to seek full access to the EU market, including the “grandfathering” of existing rights for continental branches of British firms.
Yet come the Brexit talks, it will be less a matter of what the UK asks for and more one of what Europe is prepared to give.
The group also argues for the UK to continue accepting workers from other EU countries — in fact, the country should take in more “skilled immigration” from the world. That could be a politically touchy argument, with some leaders reading the referendum vote as a sign of public discomfort with foreign labor.
Still, credit the group for not falling back on another pre-referendum argument — that the UK could rest on its position as the elite financial center bridging the Asian and American time zones.
The more forward-looking and globally minded arguments suggest opportunities for an industry looking past the immediate ructions, beyond debates about the minutiae of EU directives and UK equivalence with them.