REPORT
By Gökhan Kurtaran
London letter, week beginning Oct. 24

U.K. banks are planning to relocate amid Brexit concerns

As Brexit concerns still weigh on markets and on sterling, bankers are voicing their concern about the importance of being able to serve their European customers.

According to the Observer, Britain’s biggest banks are preparing to relocate out of the U.K. in the first few months of 2017 amid growing fears over the impending Brexit negotiations, while smaller banks are making plans to get out before Christmas. This might be one of the most serious warnings for the U.K. government as such concerns have now been shared by the chief executive of the British Bankers’ Association, Anthony Browne who warns “the public and political debate at the moment is taking us in the wrong direction.”

U.K. banks do not want to lose the so-called passporting rights for members in the single market in which financial institutions can offer financial services to companies and individuals across the EU.

On the other hand, U.K. Prime Minister Theresa May appears not to have received what she had hoped for from the Brussels summit last week. French president, François Hollande, is among those who have insisted in recent weeks that a hard Brexit will mean “hard negotiations” as Britain needs to pay the price for leaving. Following the summit, May predicted "difficult moments" ahead in Brexit negotiations but said she is optimistic she can get a deal "that is right for the U.K."

Meanwhile European Council President, Donald Tusk, urged all other leaders to remain silent before formal negotiations kick off, which will not begin until the two-year leave process is underway.  For now everyone is waiting for March 2017 for Article 50 to be triggered by May.

However, it is “very likely” that MPs will be able to vote to ratify the Brexit agreement before the U.K. leaves the EU, according to a government lawyer

James Eadie. He made the comments while defending the government in the case currently being heard at the Royal Courts of Justice, which contends that May cannot trigger Article 50 without the approval of MPs in parliament, according to the Independent.

Political implications of a Brexit decision are now clearly coming to the fore; especially between the U.K. and France. As the French presidential elections are getting closer, France began clearing the sprawling "Jungle" migrant camp in Calais on Monday. On the first day nearly 2,500 are predicted to leave the camp.

May’s relations with the Central Bank of England (BoE) Governor Mark Carney do not look very “promising” at present.

May claimed the BoE’s low interest rate policy had "some bad side-effects" on pensioners, savers and the young, during her party speech. Her comments were not welcomed by Carney who underlined the independence of the Bank of England and said he would not take instruction from politicians on how the BoE Monetary Policy Committee determines interest rates.

According to a Reuters’ story, Carney said, “The objectives are what are set by the politicians; the policies are done by technocrats. We are not going to take instruction on our policies from the political side."

The question arises as to whether all the cacophony in the country could trigger snap general elections in the spring? When May came to power last summer following the referendum, she had already made it clear there would be no need for another election. However according to the Financial Times, there are many MP’s within the Conservative party who contend that she might reconsider this stance in the upcoming months.

 

 

 

 

 

 

 

 

 

 

 

 

 

24 Oct,2016

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