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Today New City Initiative is comprised of 49 leading independent asset management firms from the UK and the Continent, managing approximately £500 billion and employing several thousand people.

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Back to the Drawing Board

Back to the Drawing Board

In June 2016, nearly all reputable media outlets and indeed some financial institutions agreed that Brexit posed a risk tothe City of London’s influence in the world economy. The UK’s financial services industry provides a gateway for the rest of the world into Europe, and for Europe into the rest of the world. Many felt this USP would be chronically imperilled by Brexit. 

Since the referendum, attitudes have moderated. Organisations realised they could create a separately capitalised entity in an EU country, while maintaining their UK presence. It was also rumoured that UK government officials warned relocating financial institutions not to congregate in any one EU market, so as not to jeopardise or threaten the UK’s influence. 

Many financial institutions – at least those with EU client interests – reluctantly accepted Brexit and were willing to work around it. The actual outcome of Brexit was difficult to predict even when the Conservatives had a working majority but people knew the core facts – i.e. the UK would leave the Single Market and Customs Union.  Today, the end result of the negotiations is more difficult to forecast.  

Compromises will probably have to be made by the minority government, an argument could be made that Brexit may be softer than what had been expected, given that consensus and allegiances will have to be built across some of the political parties. On the fringes, it has been suggested Brexit may be called off. The latter is not particularly realistic but cannot be ruled out. Ultimately, we will have to wait and see. 

Brexit negotiators have less than two years to strike a deal. Even with a majority government leading the way, this was ambitious. But with a government beholden to smaller parties’ support, the hope for agreement by 2019 is even less assured.If another election is called yielding a different set of political leaders, Brexit talks will further stutter, and become even more fragmented.  

In the grand scheme of things, none of this really matters. Uncertainty is the real danger to financial institutions and economies, and the UK’s position is anything but clear. Those organisations hesitating about exiting the UK may become less so if it becomes apparent that Brexit is being poorly handled.  

The NCI has no political leanings and its position is clear. Negotiations on Brexit need to be dealt with competently and capably if the UK and EU are to reach a mutually acceptable agreement. Transparency about the progress of the negotiations is needed and a two-way dialogue between the government and financial services – not just fund management – is critical if the UK is to remain a leading financial centre.  NCI aims to be at the heart of that dialogue.