Nigel Green, founder and CEO of deVere Group, the global financial advisory organisation, has said that the UK financial services industry may never recover from the effects of Brexit. Green said today in a statement that he felt the actual process of leaving the EU itself is now increasingly irrelevant and that the country’s financial services sector has already sustained unprecedented damage, regardless of whether the UK now leaves the EU.
“Following years of uncertainty and a lack of firm leadership from all parties, firms across the sector have had to take precautionary action to safeguard their interests,” Green said. “Typically, this involves relocating parts of their business or key staff to places like Paris, Luxembourg, Dublin, Frankfurt and Amsterdam, or setting up legal entities in the EU. Sometimes this has been done publicly, but a lot has, so far, not been disclosed, so we still can’t know the full scale of the situation.”
With no meaningful access to the EU’s single market, Green thinks that the UK’s financial services industry will be bracing itself for what is likely to be a long and steady decline, ultimately losing its coveted ranking as the world’s top financial centre.
Financial services industry contributes 6.5% of UK GDP
Currently the UK financial services industry contributes around 6.5% to the national GDP, and damage inflicted to it by Brexit will have a knock on effect on the employment market and the government’s tax base.
Green said it was still potentially possible to turn the Brexit ship around:
“The steady drain of investment, talent and activity away from UK financial services might be able to be stopped, the situation might be recoverable, but confidence needs rebuilding fast,” he explained.
DeVere Group is one of the world’s largest independent advisors of specialist global financial solutions serving international and mass affluent as well as high net worth investors. It has a network of more than 70 offices across the world, and is responsible for advising more than $12 billion in assets.
Many financial services firms, including brokerages, are relying on workarounds that could see them continuing to access EU markets via unilateral agreements. For example the Dutch government is considering legislation which will allow UK-based investment firms to provide investment services and enter into own account trading within the meaning of the MiFID directive without needing a local Dutch license. The legislation would kick into force in the event of a no deal Brexit and seems to be a largely temporary measure, to cover a period before some form of agreement between the EU and the UK can be negotiated.