Brexit Bulletin: Banks in the Fast Lane?
Regulators risk putting banks on a fast track out of London by demanding they make detailed plans for a worst-case Brexit scenario.
John Glover and Richard Partington of Bloomberg report on Tuesday how finance executives are concerned that demands from the Bank of England and European Central Bank for full contingency plans may accelerate the relocation of activities from London to the continent.
The pressure illustrates the delicate balance for regulators, who need to ensure there are plans to maintain financial stability without spooking banks into shifting business. The BOE’s Prudential Regulation Authority has written to lenders and other financial companies giving them a July 14 deadline to set out their plans, while the ECB said last week it takes at least six months to win a banking license.
“You’re going to see an acceleration of real activity around these project plans,” said Andrew Gray, head of Brexit for U.K. financial services at PricewaterhouseCoopers. “Regulators are all gently upping the pressure on the boards and branch managements to start to execute on some of their plans. Firms may not want to do this, but they all now recognize they’ve got to.”
Chemical companies are preparing for a potentially disruptive Brexit as the divorce threatens an integrated market underpinning more than €40 billion ($42 billion; £34 billion) a year in two-way trade.
Marco Mensink, director general of the European Chemical Industry Council representing manufacturers such as BASF, Akzo Nobel and Dupont, told Bloomberg’s Jonathan Stearns and Viktoria Dendrinou that the intensity of cross-Channel shipments means Brexit poses a particular risk to his sector.
“We are going to ring many, many alarm bells during the Brexit negotiations,” Mensink said in an interview. “Things risk veering off course. There seems to be a disconnect in communication between both sides.”
- A survey from ORB International in the Telegraph showed support for Prime Minister Theresa May’s handling of the Brexit talks at a five month high of 55 percent
- The Sun said the government is considering “Barista Visas,” which the hospitality sector could use to hire young EU workers for two years
- Chancellor of the Exchequer Philip Hammond told Poland’s Rp.pl that the U.K. will still need a “large number of workers from the continent” after Brexit
- The government is trying to keep the European Medicines Agency and European Banking Authority in London even as the EU prepares to outline how other cities can compete for them, according to the Financial Times
- Football’s Premier League is to announce a pre-tax loss of £312 million in part because of the pound’s slide after the referendum, the FT says
- Lloyds will apply for a banking license to operate in Berlin, the Telegraph says
- The Mail on Sunday highlighted comments from 2012 by Brexit Secretary David Davis in praise of Europe’s single market
- Change Britain estimated that just one in 10 of the government’s pre-referendum economic warnings turned out to be correct, the Daily Mail reported
- Leave Means Leave issued a report arguing how the U.K. can adapt to life outside the EU’s customs union
- The Institute of Economic Affairs argued that subsidies for the fishing industry should be phased out after Brexit.
In Case You Missed Them
Before the holiday weekend, Bloomberg’s Tim Ross and Rob Hutton profiled Foreign Secretary Boris Johnson, while Tim also reported how Trade Secretary Liam Fox was seeking easier access for British banks to Wall Street and arguing the EU can’t block the U.K. from forging pre-Brexit trade talks. David Hellier and Alex Morales reported how Business Secretary Greg Clark is trying to water down some of the more radical ideas aimed at executive greed and corporate misbehavior.
On the Markets
The pound’s persistent weakness since the referendum suggests economic conditions will worsen in the long-run, according to a paper published by the Federal Reserve Bank of San Francisco. Meanwhile, a report published by the World Economic Forum calculated that Brexit will cost Britain £140 billion, or the equivalent of £300 million a week over eight years.
Investors stung by Brexit are taking no chances of a repeat as the French presidential election nears. Bracing for a similar political upset they are positioning for potential declines in the euro as well as France’s government bonds, according to Bloomberg’s Stefania Spezzatti.
Brexit is allowing government officials to rack up the air miles. Ministers spent more than £1.3 million on official overseas travel in the second half of last year, in part because of the need to drum up business and promote Britain, the Times reported. The Foreign Office increased its ministerial travel budget by more than 70 percent to £260,000 and Fox’s trade department ran up a bill of £131,000, the newspaper said.