Will Britain piss off and get on with Brexit II (mod warning in OP)

threeball

joeguevara wrote: »

All EU countries and EEA entities have passporting rights for financial services. This means that let’s say a Lichtenstein insurance company can open a branch in Ireland and provide services. If they didn’t want to open a branch they can do so over the internet. No other country have these rights. The U.K. has ceased to be a contracting party to the EEA so unless the U.K. Rejoins which they say won’t, no financially regulated entity such as a Bank, Investment Firm, Insurance Firm, Fund, Fund Management Company or insurance intermediary will be able to provide any services in the EU. If a U.K. entity wants to provide services, they will Be required to move the heart and mind of the financial entity to an EU country. Heart and Mind are the Senior Management, Executive Directors and Heads of Key Business Units. EU Regulators have completely tightened up firms setting up letterbox entities and still have the Heart and Mind elsewhere. They would also be subject to EU liquify and/or Solvency requirements which would require ring fenced capital to be held in specific EU jurisdictions.All charges and taxes related to the financial services will be collected in the EU State and contributed to the Economy.

Boris may be bullish and say that the EU will not withdraw passporting rights but if we look at a real life Example I.e, Switzerland they have no passporting rights.

So any U.K. entity with an EU customer base will have to redomiciled from U.K. to an EU state. Not only will the U.K. lose the tax take from the corporate but also from PAYE workers and the huge taxes on bonuses. it gets worse, there will be a brain drain in that all the highly qualified personnel will probably move to the redomiciled country which will leave a vaccum of skilled financial professionals.

If that isn’t bad enough, it gets worse. As Switzerland has no passporting rights to the EU, the vast majority of Swiss International firms have their EU head office in the U.K. in order to passport around Europe. So these will have to be relocated to an EU State.

In one fail swoop London will have probably lost all of its EU business as well as all of the key Swiss business.

All of this is going to be an absolute nightmare. Why would the EU grant the U.K. passporting rights when if they did so, they would not get to inherit a financial services industry and all the revenue that it generates.

I think you're agreeing with me then?

joeguevara

threeball wrote: »

I think you're agreeing with me then?

Yes, agreeing completely. But think it’s even worse for the UK with the Swiss entities based there.

It is downright crazy why none of these issues seem to have been raised during the referendum campaign. If they were, they weren’t widely publicised and the Brexiteer voter certainly didn’t get the brief.

Saying that, the average Brexiteer voter would probably trade an Internstional Financial Services centre in return for a crate of straight bananas.

Edgware

joeguevara wrote: »

Yes, agreeing completely. But think it’s even worse for the UK with the Swiss entities based there.

It is downright crazy why none of these issues seem to have been raised during the referendum campaign. If they were, they weren’t widely publicised and the Brexiteer voter certainly didn’t get the brief.

Saying that, the average Brexiteer voter would probably trade an Internstional Financial Services centre in return for a crate of straight bananas.

Plenty respect for democracy there

theological

listermint wrote: »

Specifically what markets and why. Details please. What market and for what purpose something they can't replicate internally or obtain elsewhere.

Be more specific since it's your central thesis.

This article should help you with this question. It'll also help you with the question as to why disparate cities in the EU can't pick it up over night.

Even governments rely on the sovereign debt markets in the City for issuing and selling bonds. That's before we consider other things such as derivatives clearing, technology infrastructure and expertise built up over centuries. I think you should explain to me how you propose building all of this up somewhere else within 11 months.

A lot of the posts on this thread are pretty petty and vindictive. Why are people so emotional about this?

The reality is the following. A country decided to leave a supranational bloc. Why is that an emotive topic?

As an Irish person (who maybe doesn't toe the majority view) living in Britain. I wish the best for the UK and for my British friends and see no reason why the UK can't succeed outside the EU.

threeball

theological wrote: »

I see no reason why the UK can't succeed outside the EU.

And there's your problem. Brexiteers dream of all the positives whilst ignoring the far more likely negatives.

Whether you like it or not the world is moving from a rush towards globalisation over the last 3 decades back towards a more localised economy as climate change etc sets the parameters moving forward. Britain has decided that it's markets are 1000s of kms away in nations with huge populations but not very developed.

Finances can move anywhere in a whim. You're basically moving people and servers.

joeguevara

Edgware wrote: »

Plenty respect for democracy there

I actually complete respect the leave decision. If the vast majority of people didn’t want to leave then Boris and the Conservatives wouldn’t have had such a resounding victory.

With regards to the important issues not being raised, I blame Tony Cameron and all who (I use this word loosely) organised the remain campaign. They were so arrogant that there was no chance of loosing, they didn’t set out any of the issues that came to the fore during the withdrawal negotiations.

My last comment was tongue in cheek and wasn’t meant to be offensive. It was an interview of a voter who was celebrating the Brexit win, which reminded me of the Monty Python Life of Brian sketch. When he was asked why he was celebrating his only response was that Brussels would have to leave the fruit and veg market alone. I presume he was a market trader.

theological

threeball: You say that finance can move anywhere in a whim. If that's true why haven't the EU got a rival financial centre to London. For example over 80% of interest rate swaps are still traded in London. I suspect the same is true for a lot of other products. London isn't just a leader in the EU in financial markets. It dominates the EU. Why? Because London does international and global trade rather than just European trade. It is a meeting spot for Asia and America and it has a lot of clearing infrastructure.

That's not replaced by carting a few server boxes around.

As the article that I linked to says it also requires a huge shifting of legal experts and insurers also.

Let's stick with reality. London will dominate financial services in Europe going forward and we need a sensible trade deal that benefits all parties. Anything else is empty bravado.

I also question your claims about climate change and moving goods. I think that is going to continue happening. Rightly or wrongly.

CelticRambler

joeguevara wrote: »

Yes, agreeing completely.

I'm not! Much has been made of the loss of passporting rights, but it's another example that bolsters the Leavers' "Project Fear" argument. See here for my full post on the subject a month ago on the other Brexit thread; in summary it will be a blow, but not fatal nor catastrophic.

theological wrote: »

This article should help you with this question. It'll also help you with the question as to why disparate cities in the EU can't pick it up over night.

Even governments rely on the sovereign debt markets in the City for issuing and selling bonds. That's before we consider other things such as derivatives clearing, technology infrastructure and expertise built up over centuries. I think you should explain to me how you propose building all of this up somewhere else within 11 months.

There's definitely a mindset amongst some Remainers-by-proxy that London will collapse in a bonfire of banknotes before too long, which is both irritating to read and frustrating to see used by Leavers-by-proxy as evidence that the situation is being sensationalised.

But your post, theological, includes all the reasons why a trade deal that doesn't include financial services will cause irreparable harm to the City of London, and by extension, to the British economy:
(a) no, this business can't be transferred overnight - but there is now a good reason for the EU to encourage its transfer as soon as practical
(b) technology infrastructure and expertise built up over centuries count for little when there is a positive drive to replace them with newer technologies and alternative expertise with the express intention of not being dependent on a non-aligned nation.

European history is full of examples of centres of "global trade" suddenly - in socio-economic terms - losing their status because of a paradigm shift. Few of these places saw an overnight decline, but they did eventually lose whole sectors of industry. My personal opinion is that London, outside of the EU/SM, will simply decline in importance over a decade or two, until it holds roughly the same rank as Zurich or Frankfurt. In itself, that'll be no great trauma ... but the knock-on effects on the British economy as a whole (by then relieved of the territories of Scotland and NI) will be quite considerable.

Ger Roe

joeguevara wrote: »

Brexit Horse walks into a Bar.

Barman says: why the long farce?

Now that it has finally happened, I put this audio piece together with some of my key memories of the entire process. It's Abba's 'So Long' the Mairead McGuinness Mix.

https://sndup.net/6sb4

I know there is still a rocky road ahead and I fear for the implications for this country, but I am still glad that we at least have reached the crossroads, at last.

joeguevara

theological wrote: »

threeball: You say that finance can move anywhere in a whim. If that's true why haven't the EU got a rival financial centre to London. For example over 80% of interest rate swaps are still traded in London. I suspect the same is true for a lot of other products. London isn't just a leader in the EU in financial markets. It dominates the EU. Why? Because London does international and global trade rather than just European trade. It is a meeting spot for Asia and America and it has a lot of clearing infrastructure.

That's not replaced by carting a few server boxes around.

As the article that I linked to says it also requires a huge shifting of legal experts and insurers also.

Let's stick with reality. London will dominate financial services in Europe going forward and we need a sensible trade deal that benefits all parties. Anything else is empty bravado.

I also question your claims about climate change and moving goods. I think that is going to continue happening. Rightly or wrongly.

I’m going to use the Funds industry as an example.
The reason that the EU didn’t have a rival fund industry to London was that London was in the EU. Now that it’s not (After transition)it cannot manage EU funds or provide Investment services to them as it does Not have the regulatory authorisation to do so. All U.K. UCITS (retail funds) will be redesignated as AIFs after transition.

UCITS is the go to fund for worldwide retail investors. London won’t have them so they will move. Same as EU Banks, Eu Insuers etc.

So to say that London will dominate financial services is not true. It cannot have anything to do with EU financial services once withdrawn. no denying that. If it thinks that EU will grant them permissions, why would they. If they don’t everything moves to EU.

EU regulators are better in offer more protections. ESMA and EIOPA are considered top of their game. Investors will want their money int the best and secure market. London will not be that and the EU will.

Is there any evidence or guidance (other than anecdotes) that could prove otherwise? If so I would be happy to read.

threeball

theological wrote: »

threeball: You say that finance can move anywhere in a whim. If that's true why haven't the EU got a rival financial centre to London. For example over 80% of interest rate swaps are still traded in London. I suspect the same is true for a lot of other products. London isn't just a leader in the EU in financial markets. It dominates the EU. Why? Because London does international and global trade rather than just European trade. It is a meeting spot for Asia and America and it has a lot of clearing infrastructure.

That's not replaced by carting a few server boxes around.

As the article that I linked to says it also requires a huge shifting of legal experts and insurers also.

Let's stick with reality. London will dominate financial services in Europe going forward and we need a sensible trade deal that benefits all parties. Anything else is empty bravado.

I also question your claims about climate change and moving goods. I think that is going to continue happening. Rightly or wrongly.

London dominates for a few reasons, tradition/historical reasons being one. Because it had the ability to trade freely with Europe was a major factor. The third reason is that bankers are a wealthy bunch and they like the expensive restaurants, opera, nightlife that very few cities in Europe can offer and London is better than most in that regard. Be that as it may, when the regulatory rules dictate that you can't freely trade with one of the biggest markets then a large section will ignore points one and three.

theological

joeguevara wrote: »

I’m going to use the Funds industry as an example.
The reason that the EU didn’t have a rival fund industry to London was that London was in the EU. Now that it’s not (After transition)it cannot manage EU funds or provide Investment services to them as it does Not have the regulatory authorisation to do so. All U.K. UCITS (retail funds) will be redesignated as AIFs after transition.

UCITS is the go to fund for worldwide retail investors. London won’t have them so they will move. Same as EU Banks, Eu Insuers etc.

So to say that London will dominate financial services is not true. It cannot have anything to do with EU financial services once withdrawn. no denying that. If it thinks that EU will grant them permissions, why would they. If they don’t everything moves to EU.

EU regulators are better in offer more protections. ESMA and EIOPA are considered top of their game. Investors will want their money int the best and secure market. London will not be that and the EU will.

Is there any evidence or guidance (other than anecdotes) that could prove otherwise? If so I would be happy to read.

So you're saying that no other city in the EU wanted to build a financial centre because there already was one? Not following your logic here.

Also London isn't a financial centre just because of EU activity. It is a meeting point for world trade particularly between the US and Asia.

As for not being able to manage EU funds. Most banks in the London have already made preparations for Brexit. Most already have other legal entities in the EU (and have done for years anyway) that they can book against but most of these moves have involved hundreds rather than thousands of staff. One of the first requirements the FCA gave banks was to get ready for Brexit and demonstrate their strategy.

As for EU regulators somehow shutting out non-EU business there are already venues with equivalence status outside of the EU. For example as I've mentioned before on this thread the Chicago Mercantile Exchange.

I think the EU realise that they need a financial services agreement with the UK as much as it is needed the other way around because of the facilities and infrastructure for trading that the UK has. Again all of this is mentioned in the article I linked to.

joeguevara

Happy Brexit days posters were placed in a block of flats in Norwich. Nothing wrong with that. People should be proud of the fact that the U.K. has achieved what the vote wanted. However, these Happy Brexit day posters then demanded that only English be spoken in the flats. Police investigating.

https://news.sky.com/story/happy-brexit-day-poster-telling-people-to-speak-english-reported-to-police-11924342

threeball

threeball wrote: »

And there's your problem. Brexiteers dream of all the positives whilst ignoring the far more likely negatives.

Whether you like it or not the world is moving from a rush towards globalisation over the last 3 decades back towards a more localised economy as climate change etc sets the parameters moving forward. Britain has decided that it's markets are 1000s of kms away in nations with huge populations but not very developed.

Finances can move anywhere in a whim. You're basically moving people and servers.

Apparently people in places with an average wage of $100 per month are going to be buying all these British made goods and services.

theological

threeball wrote: »

London dominates for a few reasons, tradition/historical reasons being one. Because it had the ability to trade freely with Europe was a major factor. The third reason is that bankers are a wealthy bunch and they like the expensive restaurants, opera, nightlife that very few cities in Europe can offer and London is better than most in that regard. Be that as it may, when the regulatory rules dictate that you can't freely trade with one of the biggest markets then a large section will ignore points one and three.

A lot of the growth in the City came about as a part of the Big Bang in the late 1980's and a lot of work to create an environment which was friendly to financial services businesses by deregulation and moving to electronic trading.

What "regulatory rules" are you suggesting the EU is going to impose all of a sudden that is going to destroy the City? I enjoy a good horror story as much as the next person. I just like it to be realistic.

threeball

[Deleted User] wrote: »

Apparently people in places with an average wage of $100 per month are going to be buying all these British made goods and services.

Exactly, these countries are only worthwhile if you pick up the government contracts which isn't worth a Damn to 95% of British businesses who only deal with selling to a distributor or joe and paddy soap.

joeguevara

theological wrote: »

So you're saying that no other city in the EU wanted to build a financial centre because there already was one? Not following your logic here.

Also London isn't a financial centre just because of EU activity. It is a meeting point for world trade particularly between the US and Asia.

As for not being able to manage EU funds. Most banks in the London have already made preparations for Brexit. Most already have other legal entities in the EU (and have done for years anyway) that they can book against but most of these moves have involved hundreds rather than thousands of staff. One of the first requirements the FCA gave banks was to get ready for Brexit and demonstrate their strategy.

As for EU regulators somehow shutting out non-EU business there are already venues with equivalence status outside of the EU. For example as I've mentioned before on this thread the Chicago Mercantile Exchange.

I think the EU realise that they need a financial services agreement with the UK as much as it is needed the other way around because of the facilities and infrastructure for trading that the UK has. Again all of this is mentioned in the article I linked to.

Dublin and Luxembourg are world round fund financial centres. The reason why London dominated was that it was English speaking and had highly skilled personnel but mainly because it was in the EU. If it’s not it loses its advantage for EU business. Yes of course it services Asia etc. But lose EU which will cause a brain drain other markets may follow. If it loses its tie to Switzerland because Swiss Banks can’t passport into EU from London then you will have lost two major markets in quick succession. I’m not saying London will be no more. But it will have lost its dominance and commercial advantage, the article that you quoted was an opinion piece by a British analyst which is mainly hit and hope but no tangible evidence to base the opinion on.

threeball

theological wrote: »

A lot of the growth in the City came about as a part of the Big Bang in the late 1980's and a lot of work to create an environment which was friendly to financial services businesses by deregulation and moving to electronic trading.

What "regulatory rules" are you suggesting the EU is going to impose all of a sudden that is going to destroy the City? I enjoy a good horror story as much as the next person. I just like it to be realistic.

It was all laid out very well for you in the post by joeguevara. No point in me reposting it.

The big bang was Thatchers decision to basically abandon the north if the country in favour of London specifically banking by placing very lax regulations on the industry. They then proceeded to tell the north that it was Europe's fault they were going down the drain and kept selling the message about Jonny foreigner for the next 40yrs. It would be ironic if it was the collapse of the banking system that actually brought the chickens home to roost.

theological

Dublin and Luxembourg cannot handle the amount of business London can because of many reasons cited in the article I linked to in this post. The financial services business in London is orders of magnitude bigger than what happens in either of those places.

There also is a housing shortage in Dublin as we all know. The infrastructure isn't there in either city to take the baton from London as a world trading centre. London is the only European city in the world's top 10 financial services centres.

I think I read the London stuff won't be part of the deal. The EU will just decide whether or not the banks get passporting. I imagine that if the EU needs London, it will do that. But I suspect that the EU will slowly build up the capacity and ability to do what they require and then end passporting say five or ten years from now.

It would be a bit absurd for a bloc the size of the EU to rely on the banking system of a non-member indefinitely.

Irishmale0399

https://news.efinancialcareers.com/uk-en/3000398/brexit-banks-moving-out-of-london

biko

Irishmale0399 wrote: »

https://news.efinancialcareers.com/uk-en/3000398/brexit-banks-moving-out-of-london

Bank of America is moving part of its markets business to Paris and part of its banking business to Dublin.
Barclays' main post-Brexit hub will be Dublin
Credit Suisse plans to move its EU-focused investment bankers to ..... and Dublin.
Goldman Sachs is moving its investment .... to Dublin.

Good no?

Deub

theological wrote: »

Dublin and Luxembourg cannot handle the amount of business London can because of many reasons cited in the article I linked to in this post. The financial services business in London is orders of magnitude bigger than what happens in either of those places.

There also is a housing shortage in Dublin as we all know. The infrastructure isn't there in either city to take the baton from London as a world trading centre. London is the only European city in the world's top 10 financial services centres.

You seem to think that it is too big to go elsewhere. However it is not how business works. If it is economical medium term, they will move overtime. It won’t be overnight.

Irishmale0399

biko wrote: »

Good no?

The simple fact is that any company based in the UK today who wish to continue to trade with the EU free market have or plan to move their European head offices in the near future. No company or bank is going to leave EU trading for the sake of Brexit.

theological

Irishmale0399 wrote: »

The simple fact is that any company based in the UK today who wish to continue to trade with the EU free market have or plan to move their European head offices in the near future. No company or bank is going to leave EU trading for the sake of Brexit.

Every bank in your article is moving hundreds not thousands. And I agree for some functions a small number of people will need to move to work in EU member states.

There are 300,000 people working in the financial services industry in London. I think it's fair to say yes there have been (mostly they are done already) small moves out of the City to the EU, but the lions share are staying there.

J Mysterio

biko wrote: »

Good no?

Yes, good for Ireland.

But as a Brexit supporter, do you see that these businesses leaving the UK is the opposite of good for the UK? i.e bad

How much taxes come from the assets and transactions themselves? Like when the news said last year that a trillion pound in assets would leave the UK, is there much of an actual effect from that?

This website gives a bit of a breakdown but doesn't give enough detail.

https://www.cityam.com/financial-sector-contributed-record-level-of-uk-tax-in-2019/

PwC’s report showed that of the 2019 figure, £33.4bn was paid by companies directly. The other £42.1bn was paid by employees through income tax and customers through levies such as VAT.

Irishmale0399

theological wrote: »

Every bank in your article is moving hundreds not thousands. And I agree for some functions a small number of people will need to move to work in EU member states.

There are 300,000 people working in the financial services industry in London. I think it's fair to say yes there have been (mostly they are done already) small moves out of the City to the EU, but the lions share are staying there.

How are you privy to how many people they are planning to move??? You are speculating nothing more. I know the company I work for is moving its UK based team to Ireland and Germany, that means 800 employees have been given the choice...move or leave. That is its full UK and Ireland admin setup....


All in all, the UK will not have job gains at the end of the process of Brexit. I strongly doubt Boris is going to pull 100K+ jobs out of the hat in the next 8 months. As I asked a number of times in here....what does the UK provide that the EU cannot provide itsself with from within???

unit 1

If london achieved its ascendancy after the big bang in 85, then surely it could be reversed by another "big bang" if it happened.
Anyone hear any rumours about a "big bang" in world finance recently?

theological

Irishmale0399 wrote: »

How are you privy to how many people they are planning to move??? You are speculating nothing more. I know the company I work for is moving its UK based team to Ireland and Germany, that means 800 employees have been given the choice...move or leave. That is its full UK and Ireland admin setup....


All in all, the UK will not have job gains at the end of the process of Brexit. I strongly doubt Boris is going to pull 100K+ jobs out of the hat in the next 8 months. As I asked a number of times in here....what does the UK provide that the EU cannot provide itsself with from within???

I read the link you provided a few posts ago. Didn't you? It explains the numbers that will be moved. All of them are in the hundreds.