Banks Prepare To Leave London In Brexit Fallout

The head of the British Bankers Association warned that major banks will be starting to exit London early next year in response to the supposed restrictions imposed under Brexit. Anthony Browne said, “Most international banks now have project teams working out which operations they need to move to ensure they can continue serving customers, the date by which this must happen, and how best to do it. Their hands are quivering over the relocate button. Many smaller banks plan to start relocations before Christmas; bigger banks are expected to start in the first quarter of next year.” The response from the government has been an attempt to assure the City that it will somehow protect the interests of the financial sector and one idea that has been floated is an equivalence deal with the EU that will allow both Britain and the EU to recognize each other’s regulatory systems. Browne dismissed the idea of an equivalence deal as “a poor shadow of passporting” which allows UK banks to sell banking services on the continent. Browne also put a shot across the bow of the EU, pointing out the UK banks currently lend over 1 trillion Pounds to the EU, “keeping the continent afloat financially”, and that Brexit threatens this arrangement.

Meanwhile, the Belgian region of Wallonia looks like it will be able to scuttle the EU-Canada trade pact. EU trade deals must be ratified unanimously by every member and Belgium is not allowed to ratify a treaty without the agreement of all of its five regions. Chrystia Freeland, the Canadian trade minister, walked out of the talks on Friday, saying, “It seems obvious that the EU is now not capable of having an international agreement, even with a country that shares European values such as Canada, even with a country that is so kind and patient”. If the EU can not even pass a trade agreement with Canada, it will be even more difficult to get all members to agree to the terms of Brexit. And, if no agreement is reached, then all the treaties that govern the relationship between the UK and the EU will expire. Right now, with the chaos in the EU and especially the rise of the right-wing in Germany and France, that outcome is looking increasingly likely. That would leave Britain without any relationship with the EU and increasingly isolated. Theresa May and her government seem almost oblivious to this possibility as well as the damage that the uncertainty of the future is having on the long-term prospects for the UK economy. Anthony Browne tried to provide them with a dose of reality.