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Brexit Wars 3

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#27396

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Dedicated to John, Huw and Broadmoor.

Love from frog!


#27397

You (and Jack) appear unable to read the detail in your own posted article which agrees precisely with what I’ve been saying: Net there will be less jobs and many financial companies are now using EU state legal entities to serve their non-UK business… and quite apart from the loss of jobs in the UK there will be a loss in the corp tax as they put more business through the EU state legal entities rather than UK legal entities.

Here’s some more seeing as you introduced the impact to UK Financial Services after losing the argument regarding the impact of Leaving the EU on Tech industries… read it and weep:

"
Britain’s status as Europe’s leading financial services centre will survive Brexit, but it is going to get hurt. Under any Brexit scenario, it is set to be smaller, poorer, and less influential than it is now. And yet for some reason, this is hardly ever mentioned. Britain’s most successful export industry is about to go through major changes and the press barely covers it.

Early in the negotiations, British financial firms realised they would lose the valuable ‘passporting’ rights that allow them to do business in any other European country with minimal extra regulatory scrutiny.

Instead, under regulatory pressure, the UK’s banks, insurance companies and asset managers started preparing for the hardest of hard Brexits. The most difficult and expensive part of this involved setting up capitalised subsidiaries in EU27 countries to ensure that, even in the event of a no-deal Brexit, trading problems will be minimised as much as possible.

About £1trn of assets have been moved from the UK to the EU27, according to EY. Some 7,000 financial services jobs are expected to go in the near future.

This is far fewer than pessimistic early predictions had assumed. London will remain Europe’s leading financial centre for the foreseeable future, thanks to its depth of expertise, the predictability of its legal system, the attractiveness of the city as a place to live and the use of English.

But the long-term outlook is poor. Loss of market access will likely result in a steady drip-feed of jobs and capital moving from the UK to the EU.

Regulators on the continent have taken a firm line on British demands for special deals covering financial services. Germany and France see Brexit as an opportunity to build up their own insurance, asset management and banking sectors. Firms will be required to constantly beef-up their operations on the continent if they want to keep doing business in it.

UK firms are already choosing to grow their operations in the EU27 - not only to ensure compliance with the bloc’s rules, but also to be nearer to where regulatory and political decisions are made. It’s no coincidence that the insurance marketplace Lloyd’s of London picked Brussels - a political, but not financial, centre - as the location for its first-ever full foreign subsidiary.

US and Japanese firms looking for a location to base their European headquarters no longer see London as the default option, according to Sir Mark Boleat, former deputy chairman of the City of London Corporation’s Policy and Resources Committee. Putting all their eggs in one basket carries far more political risk for these firms than they ever thought possible before June 2016.

The typical Brexiter response is that leaving the EU will allow the UK to tear up financial red tape and find new trading partners outside Europe. In a recent speech, Financial Conduct Authority chief executive Andrew Bailey substantiated that view, by saying the regulator should pursue a “lower burden” approach to regulation after Brexit.

But there’s a problem. After the chaos of the financial crash, the public are not necessarily supportive of lowering regulation on City firms. And actually many in the City agree. The regulatory regime that the UK built after the crisis is respected around the world. Its robustness has proven to be as much of an attraction as a deterrent to those looking to do business here.

In fact, the EU rules and regulations that govern the bloc’s financial sector were largely driven by the British. This includes key pieces of regulation such as the Markets in Financial Instruments Directive II (MiFID II), which improves the protection offered to investors, and Solvency II, which governs how insurance companies can be run. A regulatory environment for financial services that completely reflected British values and interests would look remarkably similar to the status quo.

In any case, British financial services firms have made clear they would rather follow EU rules to maintain access to markets on the continent, even if UK regulators have no say in drafting them. In the City, talk of ‘taking back control’ is usually ironic.

Over the long term, a lack of say over financial services regulation on the continent could cost the UK dear. Future iterations of Solvency, for example, will reflect the business interests of insurers in Germany, Spain or Poland, rather than the interests of the UK’s quirky specialist insurance sector.

The ultimate impact of all this is impossible to ascertain at this still-early stage in the Brexit process, but many in the City fear that, ten years from now, the UK’s financial system will be smaller and markedly less relevant internationally.

Some may argue that a downsizing of the UK’s financial sector is long overdue, but they should beware that this is likely to have profound consequences across British society.

Around 1.1 million people work in UK finance, and PwC estimates that the sector contributed £72.1bn in tax in the year to March 2017 – about 11.0% of total government receipts. Even a relatively small decline in these figures could have a noticeable impact on the UK’s ability to maintain its current spending commitments.
"
source: https://www.politics.co.uk/comment-analysis/2019/05/02/brexit-will-hammer-britain-s-financial-services-and-no-one-s


#27398

JW,

Why would I (Huw or anyone else for that matter) react in such a way? As your link states, “The ultimate impact of all this is impossible to ascertain at this still-early stage.” Which is more or less what posters like me have said previously. Now let’s look at some facts in a still evolving, complex situation. Compose yourself & try not to weep. - Link at bottom.

"Originally published in Economia on 5 December 2019. Foreign investment in UK at record level.

The UK remains a top destination for foreign investment, according to the Office for National Statistics (ONS), with investment increasing by 12.6% last year

The value of the UK’s foreign direct investment (FDI) rose by £149bn to £1.3bn in 2017.

The Department of International Trade said this was the highest level of inward stock since records began. The department welcomed the news that the greatest growth from any country came from Indian investors, rising 321% to £8bn. Stocks from Asia totalled £128bn, with investment from Japan increasing 71% to £78bn.

But this was still a small proportion compared with the amount of investment coming from the US, which increased by 19.5% to £351bn.

And while the US was the UK’s largest investor, according to the ONS statistics, investment coming from Europe totalled £744bn, with £573bn coming from countries in the EU.

Within the EU, Luxemburg and the Netherlands were the biggest investors, bringing in £116bn and £228bn respectively.

The financial services sector attracted more FDI than any other industry, attracting £385bn into the UK. This is an increase of 19.5% from the previous year.

Financial services account for 28.8% of total inward investment, the government said.

International trade secretary Liam Fox said, “As we prepare to leave the EU, foreign investors from around the globe are as confident as ever investing in the UK.

“The significant rise in the amount of investment from Asia is evidence that the growing economies are important partners for the UK, relationships which I am committed to developing and deepening.

“FDI has an overwhelmingly positive and transformative effect on the UK economy, bringing jobs, prosperity and growth. My international economic department is focused on ensuring that the effects are felt in every part of the country.”

https://www.icaew.com/technical/business-resources/business-environment/the-economy/foreign-investment-in-uk-highest-level

Edit: obvious typo exists in 3rd paragraph of linked article. It should of course be “£1.3 trillion (not bn) in 2017”.


#27399

JW - hi

We could always offset any shortfall by reducing the £14.5 billion overseas aid budget. :innocent:
Tick … Tock …
JAR
:jack_o_lantern:


#27400

Yes and No… but either way it doesn’t stop the truth of what is happening with financial services firms in the UK where Huw indicated job were increasing whereas net they are decreasing.

Yes and No because there are Flows and Stocks with FDI…


FDI statistics measure two different concepts – flows and stocks:

Flows measure annual levels of investment on a net basis.
Stocks record the total book value of all existing FDI, inward or outward.
FDI in the UK

In 2018:

The value of foreign direct investment into the UK, i.e. inward flows, into the UK were worth £49.4 billion, down from £80.6 billion in 2017.
The value of inward FDI in the UK (i.e. the stock of FDI invested in the UK) was £1.5 trillion, up from £1.4 trillion in 2017.
The UK’s outward FDI flows (i.e. investments made by UK companies in companies abroad) were worth £6.3 billion, down from £99.5 billion in 2017.
The value of the UK’s outward investment position abroad (i.e. the stock of UK FDI invested abroad) was £1.40 trillion, up from £1.37 trillion in 2017.

source: https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8534

If you want to see why it is a mixed picture and why ‘Flow’ matters read the below:


#27401

Or maybe we could decrease the Pension LTA to £50,000 and stop all hip replacements on waste of space dotards like yourself.


#27402

Yes true it is most likely posturing but its so obvious and the EU must see right through it. It also shows what cummings and the Tories think of the LEAVE voters they must think they are clueless chumps to continue believing this tosh after 3 years.


#27403

IF EU companies are opening offices in the UK to keep UK business and UK companies are doing the same in the EU.
with the UK having a massive surplus in Financial services who loses most ??


#27404

Exactly Pete… net result is that Brexit is fracturing financial services in the UK and in the long run there will be less of it based in the UK than there was before we left the EU.

Hence why multitudes of business flows for non-UK business now flow through EU state legal entities where previously they used UK legal entities.
There’s always a price to be paid.


#27405

JW - hi

… all celebrate Freedom Day on the 31st. :grin:
Tick … Tock …
JAR
:jack_o_lantern:


#27406

Cant call it United Kingdom any more…

The Welsh Assembly has joined the Scottish Parliament and the Northern Ireland Assembly in rejecting the Brexit bill.
It means all of the UK’s devolved law-making bodies have voted against the withdrawal agreement legislation.


#27407

Thanks for the clever well thought out contribution to our discussion group.
Its a little better that making up lies like you usually do…


#27408

Drip Drip Drip JP buys a whole building…

French capital should have already benefited from the relocation of 4,000 employees,


#27409

Is this you JAR??


#27410

Hi Jar,

Have you set your alarm clock to “bong” at the designated hour?

Cheers,

Frog


#27411

pete - hi

What lies m8?
Tick … Tock …
JAR
:jack_o_lantern:


#27412

FIAT - hi

No m8 - will still be celebrating well past 11pm
Tick … Tock
JAR
:jack_o_lantern:


#27413

pete - hi

Not me m8 … the guy’s too well dressed :grin:
Tick … Tock …
JAR
:jack_o_lantern:


#27414

It’s clear that the US isn’t going to do anything meaningful to help arrest either Climate Change or the biodiversity crisis where a million species of plants and animals face extinction due to deforestation, hunting, and overfishing.
In fact, they do the reverse and are speeding up the effects.
Few in the US seem to care.

Companies like Coca Cola don’t help where their Head of sustainability won’t dump single-use plastic bottles as “it might hit sales”.
source: https://www.bbc.co.uk/news/business-51197463


#27415

I see Facebook announced yesterday they are creating a further 1000 jobs in London.

The fact is @J_Westlock your economic decline narrative simply isn’t playing out. Not only is it not playing out now it isn’t playing out in forward looking economic forecasts such as the IMF’s which is predicting the UK will have higher growth than the Eurozone.