Since the summer of 2016, a state of limbo has taken
over Britain. The chaotic attempts to bring forth a deal
between the UK and its former trading bloc partners in the EU
is proving a long, drawn-out affair that's causing regulatory
headaches on the continent and in London, as well as financial
strains for businesses considering leaving their London homes
for pastures new. From France to Portugal, the Netherlands to
Ireland, plenty of countries have been keen to take a piece of
Britain's Brexit pie – which still appears warm and
ready for the taking.
At IFLR's Fintech Europe conference in London, one panel
discussed whether when it came to Brexit, it was simply a case
of "waiting to push the button", and jumping ship. However, it
seems that it even if the UK was to revise its decision via a
parliamentary vote or even a fresh referendum, it might be too
late to convince businesses already turning their backs on
London. One panellist at the event indicated that her firm had
already completed an application with regulators in a new
member state, and that it was "now too late to turn back".
This clearly breeds apprehension for those who work in
Britain's financial services. Even if Brexit weren't to happen,
or a softer option such as membership of the European Economic
Area was pursued, London may yet see its influence washed away
over time. This is both in respect of established financial
institutions and those in the flourishing fintech scene.
Some of the world's biggest banks, such as Bank of America,
have long warned that there would be no turning back from their
decision to relocate. The second-largest institution in the US
paid out a mammoth sum of $400 million to relocate its European
headquarters across the Irish Sea to Dublin. Meanwhile Barclays
has reportedly been set back £200 million shifting its EU
base to the same city.
When it comes to fintech, a recent PwC report anticipated a
growth slowdown in the UK in comparison to other EU states such
as Lithuania, which has recently updated its regulatory regimes
to compete with the UK. TransferWise, established by Estonia
entrepreneurs Kristo Käärmann and Taavet Hinrikus,
recently applied for a licence in Brussels, seeing it relocate
to Europe's political centre.
As Britain lulls in further uncertainty about where it will
stand in the world, and with the next prime minister likely to
be even more ambitious about pursuing a hard Brexit, it seems
that Britain's financial sector is all but destined to take a
hit once the UK's messy divorce is finalised. The question is
whether its longstanding reputation for innovation and gold
standard regulation will help it come back from the slump.