Brexit discussion thread II

solodeogloria wrote: »

Good morning!

My response to that is it obviously isn't. Bread and butter economics teaches that if another country or countries are suffering economically it has an impact on other countries who depend on trade from these countries.

It isn't in the EU's interest to offer a punitive deal and the area where you will see it most pronounced if it does is in access for EU countries to key financial services.

Favourable trading terms are good for both parties. There's no scenario where a bad deal for the UK is a good deal for the EU. It doesn't exist.

Julia Wailing Pedal: Yes for two reasons. The EU are going to give the UK regulatory equivalence under MiFID II I suspect. To protect their own access.

Even in the wild scenario that they don't - the UK is a global financial services centre. It is as much involved in USD clearing as it is Euro clearing and it is an ideal centre for Asian markets due to its standing, infrastructure and timezone straddling Asia and the US.

Much thanks,
solodeogloria

solodeogloria wrote: »

Good morning!

It's worth pointing out that it only might be in the EU's interests, politicially. It definitely is not in the EU's interests economically.

In pretty much every election I vote in - I vote for the party who I think has a better grasp of economics and therefore a better grasp of what to do with my taxes, and who will use them most effectively for good to ensure prosperity into the future. It's the overriding consideration. It would take a lot of political will to change that.

A good deal with a generous free trade deal for the UK is good both politically and economically for it from what I can see. A good Brexit will sate the desires of the Brexiteers, provide certainty and reassurance for business, and allow the UK to pursue global economic opportunities.

But, and this is the clincher, that depends on a good deal with the European Union. I'm confident that that is possible, and I'm confident that people will start thinking economically when the rubber hits the road. The Cabinet this week are interestingly starting to think economically in respect to the transitional details coming in whereby they will permit continued freedom of movement for 4 years after Brexit to ensure continued trade with the EU. This is sensible, and it's a sign that people are starting to think economically rather than politically.

That is very welcome. The same will happen in Brussels in due course, I'm very sure of it. Political posturing is meaningless, it's the bread and butter practical issues that people care about really.

Edit: Nody - only to set up small subsidiaries in the event of Brexit going pear shaped. There has been no major movement yet. When you claim the impact on Europe will be nil. You're very wrong. A bad Brexit will be very costly for the EU.

Much thanks,
solodeogloria

solodeogloria wrote: »

Good afternoon!

Can I suggest that you read what I wrote?

EU participation has been a factor in London's growth as a financial centre.

It is not however the only reason as some people suggest. That would be revisionist history and it would ignore the impact of Thatcher and Lawson's reforms on City regulation in the 80's.

Much thanks,
solodeogloria

By the time the UK leaves the EU, a Japan-EU trade agreement is likely to be in force, bringing the total to 100 other states that the UK will no longer have preferential trading arrangements with.

How long do you think it will take for the UK to negotiate trade deals with 100 other states?

Months? Years? Decades?

Over those decades, the EU is going to continue to negotiate free trade deals with non-EU states and is likely to have free trade agreements with almost every state on the planet by then, with the exception of North Korea, Bhutan and other states that have chosen not to be part of the global economy.

As it stands now, the UK has not 'taken back control' of its future, and it will be at the mercy of the EU when it comes to future trading arrangements with the EU.

I note your posts are quite long on generalities and very short on specifics.

For example, I haven't seen you respond at all to my posts on the EU's controls on food products from countries outside the Single Market. These controls apply even to countries the EU has trade deals with, including Canada.

Therefore, the UK's export of food products to the EU will be severely hampered unless it remains in the Single Market, even if it gets a trade deal with the EU.

Have you got anything to say about this?

Nor have you responded to my posts on the EU's civil air transport arrangements.

Do you think that withdrawing from these arrangements will help the UK's air transport sector?

solodeogloria wrote: »

Good afternoon!

Yeah - I won't just because you wrote this.

I'm entitled to hold a different view to you and I only tend to discuss with people who hold me with the same respect by which I hold them.

All the best,
solodeogloria

The latest financial institution making plans to relocate jobs away from the UK is Morgan Stanley, which has announced that Frankfurt will become its post-Brexit EU hub, a move that could shift an initial 200 jobs to Germany.

Morgan Stanley joins Standard Chartered and Nomura, both of which also picked Frankfurt as a new EU base, and JP Morgan and Goldman Sachs, which are moving jobs out of London to various other centres. Morgan Stanley’s asset management arm is to relocate to Dublin, as several European cities woo jittery banks that will not hang around to see what final deal is hammered out between the UK and Europe before they start looking elsewhere. A competition to host the UK’s bankers post-Brexit would have as its slogan: “Better in than out.”

The key for banks is regulation. The moment it was announced that the UK would leave the single market, the die was cast. Even if Brexit goes smoothly from a regulatory standpoint, which is wishful thinking, certain financial institutions that cater to Europe would need to move onshore, since conducting business would be more expensive otherwise. In some cases, it is mandatory from a compliance perspective that transactions are onshore. The beginning of a flight to Europe is not necessarily a hedge against uncertainty. In many instances, there is no choice.

Not long ago the threat of bankers leaving London en masse – often deployed by financial institutions such as HSBC – was considered an idle one. Leave London, with its favourable regulation and amenable political class, its convenient red-eye flights to New York and thriving cultural scene? Sure, the option was there if the climate ever became too hostile, but few really expected it to do so.

Not long ago the threat of bankers leaving London en masse – often deployed by financial institutions such as HSBC – was considered an idle one. Leave London, with its favourable regulation and amenable political class, its convenient red-eye flights to New York and thriving cultural scene? Sure, the option was there if the climate ever became too hostile, but few really expected it to do so.

During the 2009 furore over the government’s plans to levy a supertax on bankers’ bonuses, I recall colleagues in the private investment firm where I worked scoffing at their own industry’s threats to relocate from the UK due to the punitive legislation. “Where are they going to go?” a co-worker observed. “Geneva?”

Colleagues in the private investment firm where I worked scoffed at their industry’s threats to relocate from the UK
Everyone smugly tittered. The joke was that Geneva was boring, and not even keeping more of your pay would make you move there. This was the conventional wisdom in the City of London: apart from London’s strategic location and convenient regulatory infrastructure, there were intangible benefits that meant that only the most philistine would consider moving for financial gain – not to mention the massive headache and cost of moving. The bottom line, as far as banking institutions are concerned, is not only financial.

These attitudes were turned on their head by Brexit. But like all Brexit-related fiascos, it is not being confronted. The responses have taken the now familiar route from denial (it won’t happen), via minimisation (if it does happen, it won’t be that bad), to steeliness in the face of self-harm (it will happen and it will be painful, but it will be worth it).

Moreover, because bankers as a breed have been vilified by both the right and the left, it is even less likely that anyone would argue their case in the court of public opinion. A simplistic stereotype has been swallowed whole by the majority of the electorate. A bunch of fat-cat non-dom taxpayer-bailed bankers – probably foreign to boot – leaving town is not the hill anyone wants to die on. Good riddance. But not all people who work in a bank are “bankers”. In fact, at a place like Morgan Stanley, where I worked, bankers are not even the majority: lawyers, brokers, accountants, receptionists, personal assistants and cleaners are.

Financial services employs 7.3% of the UK workforce and, the year before the Brexit vote, contributed a record £71.4bn in taxes, almost 12% of total government tax yield. This puts the Tories in a most awkward position. The party that is supposed to represent clear-sighted financial acumen must now put Brexit ideology before financial sense as far as popular messaging is concerned – while also desperately trying to implore bankers not to leave.


Theresa May’s government has until now focused on criticising corporate elites and signalled that banks will not be a priority in the Brexit talks. But at Davos earlier this year, May said: “I value financial services in the City of London, and I want to ensure that we can keep financial services in the City of London. I believe that we will do just that.”

It is too late for that sort of talk now. It is highly unlikely that the drain can be limited only to EU-serving financial services. As talent and infrastructure move and become embedded elsewhere, so a sense that the centre is shifting develops. A practical adjustment will be followed by a psychological one. The question isn’t if Brexit is going to damage the UK’s financial services industry. It is how bad will that damage be.

The cost of Brexit to UK households has been put at $1.5 trillion (£1.2 trillion), according to a new report.

Household wealth in the UK slumped by 10 per cent, in the 12 months through June 2016, as a “direct result” of the Brexit vote, Swiss bank Credit Suisse revealed in its latest Global Wealth report on Tuesday.

This means wealth per adult has already dropped by $33,000 to $289,000 since the end of June.

This represents one of the biggest drops in wealth among major economies, with households in Turkey and Colombia faring better than those in the UK. Only households in Mexico, Egypt Russia, Ukraine and Argentina suffered from bigger losses than those in the UK.

The report, which is issued annually by Credit Suisse, said that the decline in wealth had a negative effect on the total number of millionaires in the UK. The country had lost 15 per cent, or about 400,000 people, of its millionaires during the period.

The dramatic plunge in wealth was driven by a fall in the value of the pound, which has lost about 18 per cent following UK’s decision to leave the EU.