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Select Milano Monitor

Select Milano Monitor 06/03/2017

Milano Finanza
By Claudia Chiuppi and Bepi Pezzulli
4 March 2017
Summary from Italian:
·         Since the Brexit referendum, 36,000 Italians have returned to Italy, benefitting the economy by an added €500 million. This is why it was important to push for the brain redux law as part of the 2017 Stability Law.
·         60% of returnees are over the age of 37 and are highly-skilled professionals. The tax advantages stemming from the Stability Law for those who repatriate to Italy extend even to those that are not Italian nationals, but also to EU citizens of any nationality.
·         To be eligible, the individual must have a university degree, and have undertaken continuous gainful employment/self-employment outside of Italy over the last 24 months (also transfers to those who have studies outside Italy, and are transferring fiscal residence to Italy for at least two years).
·         These individuals that have gained experience abroad will act as strategic resources for Italy, bringing great value to Italy and its internationalisation.
·         A decree put forth by Mr Pagano MP will help to make Milan the first city to establish a global business model to help solve the financial crisis by creating jobs in the smart economy; companies should begin to work with government and civil society to support the mechanism for European trade and stabilise the global economy.
By Mariarosaria Marchesano
27 February 2017
Summary from Italian:
·         The LSE-Deutsche Boerse merger is now at risk given the LSE Group’s refusal to surrender its stake in MTS. Bepi Pezzulli of Select Milano says that this could bode well for Italy.
·         Bepi Pezzulli asserted that the LSE Group’s acquisition of the Italian Stock Exchange a decade ago was not solely focused on the Milan Stock Exchange, but on MTS, cash clearing and Monte Titoli given the role of these assets in managing systemic risk and developing the banking market. He further notes that given that the LSE holds in its hands the infrastructure market of Italy, there is strategic interest in moving euro clearing to Milan, providing the Eurozone a solution to deal with the Brexit issue.
·         Mr Pezzulli’s view on the matter is further covered in Il Sole 24 Ore and International Business Times.
Milan and Brexit:
Il Sole 24 Ore (English)
By Lello Naso
1 March 2017
Italian Prime Minister Paolo Gentiloni’s visit to Milan yesterday had strong symbolic value. It was a sign of the country’s ongoing commitment to complete Milan’s journey to becoming a European city, a journey that has been underway for a while, independent of successive governments and city mayors.
What is clear from looking at Gabriele Albertini’s city council onward is that the city has found a well-defined identity. Milan did not overcome the collapse after the Tangentopoli corruption scandal in a day, but over 25 years of development work.
Leveraging private-public synergies, it took back its rightful position as a European metropolis. It is the vanguard of a wide area, from Bergamo to Varese, in which business, research, creativity and culture intertwine and stimulate each other.
The Expo Milano 2015 world trade fair was the first objective of this route and the potential starting point of Phase 2. Even with the incredible difficulties involved in the preparation of the event and a few minor scandals, the city reached the Expo in the wake of a phase that had not been seen since the years of economic boom.
This included the City Life residential and business district, Porta Garibaldi and Parco Vittoria as examples of valuing urban spaces; the fourth subway line in the transport field and the strengthening of the railways connections; the inauguration of Prada Foundation, the Armani/Silos fashion art museum and the Feltrinelli foundation; the best seasons in a decade at Teatro alla Scala opera house and the Piccolo Teatro theatre, fashion shows that are contending with Paris, and a furniture fair that has become a reference point for global design.
Aside from the long wave of organizational success that won Milan a ranking in the not-to-be-missed places in the world for the New York Times, the Expo also left the city an area which has the most infrastructure in Europe: hyper-connected, on the high-speed rail line and reachable by subway, 30 km from the intercontinental airport and linked to three highways.
It is the ideal platform for development.
The idea drawn up by the city, by the manager that led Expo and who is now mayor, Giuseppe Sala, and the former mayor Giuliano Pisapia, and Assolombarda led by Gianfelice Rocca, was to construct a major modernity accelerator on the Expo area: a pole to attract companies based on a nucleus of high quality research.
The “Human Technopole” was a project espoused by the government of former Prime Minister Matteo Renzi, financed and launched under the management of Genoa’s Italian Institute of Technology. Even among much controversy, the idea has taken shape and promises to be the initial piece of a puzzle to construct, with €2.5 billion of potential investments and with the first funds earmarked in the budget law that has just been approved.
The headquarters of foreign multinationals are set to be based there, along with the scientific faculties of the University of Milan. It could also become the new home for the headquarters of some European authorities liberated as a result of Brexit, first of all the European Medicines Agency, if the government wins the bid in June. The EU’s Unified Patent Court is also at stake. These are ongoing matches that cannot even be played without the unconditional support of the government and the country system.
This is why Gentiloni’s visit did not finish yesterday. Especially considering the unending deadlock in the capital Rome, Milan’s game is becoming the challenge that Italy is obliged to play and cannot allow itself to lose.
02 Blog
1 March 2017
Summary from Italian:
·         A meeting took place between Prime Minister Gentiloni and Milan Mayor Sala on Wednesday last week to discuss Milan’s candidacy for the European Medicines Agency and the Pact for Milan. PM Gentiloni confirmed the government’s belief that Milan is important to the future of the country, and is an attractive for investment, tourism and academia.
·         On the city’s bid to host the EMA, PM Gentiloni stated that Milan has everything in order, and now the country must work together to realise this.
·         Mayor Sala stated that the city government will organise a technical visit to London to move forward its EMA candidacy.
Il Giornale
By Chiara Campo
4 March 2017
Summary from Italian:
·         Claudia Ferrazzi has been appointed the new place marketing director for Milan to help promote the city’s brand around the world. She has previously worked as a manager at the Louvre, among other notable positions in France and Italy.
Il Giornale
1 March 2017
Summary from Italian:
·         On Friday, a technical mission of representatives from Milan came to London to assess the requirements of the European Medicines Agency should the institutions choose to transfer to Milan. Delegates included the Mayor’s Chief of Cabinet Mario Vanni and Councillor in Charge of Planning Pierfrancesco Maran.
·         There is another piece of institutional work to be undertaken with institutions in Brussels, as well. The information that is gained from these missions will help Milan to compose its candidacy dossier.
The Local
By Jean Moncrieff
6 March 2017
Britain’s decision to leave the bloc should be good news for Italian business, writes consultant and writer Jean Moncrieff – but the key word is ‘should’.
Italy has the potential to attract innovation and entrepreneurship in a post-Brexit Europe, but will the government seize the opportunity?
Italy has a long tradition of entrepreneurship.
Ninety percent of the country’s economy consists of small and medium-sized business. Many Italians dream of being their own boss, and many foreigners dream of bringing their businesses to Italy.
So, entrepreneurship should be thriving in this country.
But it isn’t, at least according to the 2014 National Experts Survey, which ranked Italy below the other major European countries across almost all aspects of the entrepreneurial ecosystem.
The survey identified government policies, government programs and entrepreneurial education as particularly lacking.
Recently the Italian foreign minister, Angelino Alfano, announced that he planned to put an emphasis on taking small and medium-sized businesses abroad, and promoting the ‘Made in Italy’ brand.
This is certainly an encouraging step, but there is an argument to be made that the government needs to do more to support entrepreneurs in the early stages of business development.
Francesca Fabbri (26) and Nicolas Barosi (22) are co-founders of Lès Geometries and are passionate about building a clothing brand for young, on-the-go city dwellers.
Lès Geometries has already made it into a handful of boutique clothing stores in Milan, and the pair is optimistic about growing beyond Italy in the future, but their immediate challenges centre on education and funding.
“We need better support structures,” explains Francesca, “people with experience that can help us navigate some of the challenges we face as a startup.”
Under Matteo Renzi, the Italian government passed the Italian Startup Act, aimed at supporting high-tech startups.
The act makes it easier to launch a company, get investment and obtain fiscal deductions, but for entrepreneurs outside of the high-tech space, none of these benefits applies.
Instead, many small businesses in Italy rely on assistance from family and friends.
Gianluca Festa, a commercialista and partner at Studio Festa, suggests that the Italian government needs do more to support early stage businesses and attract foreign entrepreneurs.
He explained: “To improve entrepreneurship there should be an economic and fiscal policy to fund the first year of a new company; making it easier for entrepreneurs to launch a new venture and access support and funding.”
For foreigners starting a new business in Italy, the challenge can be even more daunting.
Chris Luccarda – a second-generation Italian born in South Africa – recently moved back to Italy where he and his partner Eve Feng have opened the Loving Hut Vegan Cafe in Rimini,  a small city 120km south-east of Bologna.
Luccarda was advised to buy an existing business rather than to open a new one.
Chris says: “Given all the red-tape involved, our accountant advised us that it would be simpler and less expensive to take over an existing business, rather than to set up something from scratch.”
He was also lucky to find a local lawyer who could speak some English and helped them broker a good deal.
However, since taking over the business more than six months ago, they have fallen victim to the country’s complex regulatory frameworks and rigid labour market.
Brexit is a real opportunity for Italy, but only if the Italian government acts now. Berlin has its sights set on usurping London as the startup capital of Europe. Paris has announced seven new skyscrapers to lure London jobs.
If Italy doesn’t move quickly to reduce bureaucracy, it will be left picking up the Brexit scraps.
Europe and Brexit:
Insurance Journal/Reuters
By Huw Jones
3 March 2017
The European Union’s market watchdog is investigating ways to stop national regulators competing unfairly with each other as they try to attract firms from Britain after Brexit in a beauty parade of financial centers.
The European Securities and Markets Authority (ESMA) told Reuters it is studying the risk of “regulatory arbitrage” – where some EU states might offer financial firms lighter supervision than other member states in return for the jobs and high tax revenue they would bring.
While the issue concerns business coming from any non-EU country, ESMA’s move is an early sign of how some regulators believe there may be a particular need for precautionary measures for when Britain leaves the bloc.
Regulators in a number of EU countries have made clear they will not tolerate “brass plate” arrangements, where business is officially routed through an office in a member state but senior executives and IT systems remain in London, Europe’s dominant financial center.
However, the risk is that some EU states might be tempted to break ranks and allow such front operations after Brexit.
The issue is particularly likely to affect asset management; Britain is the second largest center for this after the United States, managing 5.7 trillion pounds ($7 trillion) on behalf of clients, many of them in continental Europe.
Financial firms in the UK, worried they will lose access to the bloc’s capital market, are deciding whether to move some operations and staff to new bases on the continent or in Ireland.
Frankfurt, Paris, Luxembourg and Dublin are vying to attract banks, market infrastructure firms, insurers or asset managers.
A spokesman for Paris-based ESMA said its inquiries concerned issues that a national regulator in the EU may face when financial firms from another country show an interest or make an application for a license.
“It is not focused on efficiency issues of different financial centers, but rather looking at issues around outsourcing and delegation which could lead to regulatory arbitrage,” an ESMA spokesman said.
Outsourcing and delegation refers to when key functions of operations in an EU state are being carried out in a country outside the bloc, such as in fund management. Worries could center around, for example, a firm being granted a license to operate a subsidiary in an EU country but being allowed to run much of unit’s operations from its office in Britain.
EU rules require safeguards to ensure continuity of service and clear lines of management responsibilities.
Financial watchdogs have told banks they will have to have a certain amount of capital, senior staff on the ground and approved risk models to get a license to operate across the EU.
The European Central Bank has considerable powers to clamp down, as it must first grant the license for, say, a London-based bank that wants to move operations to Frankfurt.
This is not necessarily the case in other areas like markets, which lack such powerful pan-European regulators.
A financial industry official in London said that it made sense to have some sort of common approach among regulators across the EU for the authorisation of new firms.
“But ESMA is hamstrung as they can only provide a non-legally binding recommendation, which the national regulators can freely ignore,” the official said.
Discussions of Brexit-related moves are already well underway.
Hiscox, an insurance underwriter in London, said on Monday it was in talks with regulators in Luxembourg and Malta about setting up a new insurance base in one of the countries.
Lloyd’s of London, the insurance market that Hiscox trades on, has also looked at several locations for a new EU unit.
Andreas Dombret, a Bundesbank board member, said last week that regulators must not try to undercut each other by offering firms “discounts” or incentives to relocate operations and staff to their financial center.
“There are market participants talking about this, I don’t have any direct evidence,” Dombret said.
By Francesco Guarascio
27 February 2017
The European Union will not pick an immediate fight with the City of London over its right to clear euro-denominated securities, EU officials said on Monday, as Britain prepares to trigger the process of quitting the bloc.
On a day when the EU executive made public tough language on Brussels’ policing of financial services providers from non-EU states – Britain’s likely status in 2019 – the officials said new EU rules on derivatives trading would not reopen an old battle over clearing between Britain and the euro zone.
“Territorial restrictions are definitely not going to be part of the next review,” one EU official told Reuters, referring to revisions to be proposed by the European Commission in the coming weeks to the European Market Infrastructure Regulation (EMIR), the main EU legislation on derivatives trade.
A second official confirmed that was the case.
Britain won an EU court case two years ago to defeat a bid by the European Central Bank to deprive London of its leading role in clearing euro-denominated securities. The ECB wants such trades to be cleared in one of the 19 euro zone countries.
With Britain losing the protections of membership of the EU single market on Brexit, many experts assume euro authorities will make a new attempt to pull back clearing from London.
But with concern growing that ill temper may sour next month’s expected start of the two-year Brexit negotiating process, the Commission appears set to step back from immediate confrontation over this issue with Prime Minister Theresa May.
Instead, the review will focus on cutting costs for small firms in the financial sector and extending beyond 2018 an exemption for pension funds from EMIR requirements.
A Commission spokeswoman said the proposal would include simplifications to some “targeted rules”. Previous expectations were for more comprehensive reform of EMIR, including rules governing the location of clearing.
The executive has not shied away, however, from warning that London’s position as Europe’s dominant financial market may face problems on Brexit. In a somewhat unusual step, the Commission published an internal document that sets out the complexities of authorizing firms from outside the EU accessing its market.
And, the paper said, such decisions, by which the EU accepts that a foreign jurisdiction has “equivalent” prudential and other rules to those in the Union, can also be revoked.
“An equivalence decision may be changed or even withdrawn …at any moment,” the paper said.
The spokeswoman said the publication of a document that had been commissioned before the Brexit vote was not intended as a warning to Britain, or to the Trump administration in the United States. EU ministers are concerned both countries may be tempted to pare back financial regulation to attract global business.
Equivalence may let British financial firms access EU markets but EU Brexit negotiator Michel Barnier warned last month that Brussels will apply “special vigilance” over such approvals.
Yahoo Finance/Reuters
By Huw Jones and Marc Jones
2 March 2017
Banks based in Britain seeking to do business in the European Union after Brexit should apply early for a licence to set up actual operations and not “empty shells”, European Central Bank supervisor Sabine Lautenschlaeger said on Thursday.
In the strongest comments yet on the subject from an ECB official, Lautenschlaeger warned lenders in Britain not to circumvent rules.
She declined to say how many staff a new banking operation should have, saying it would be looked at on a “case-by-case” basis.
She expected many of the 40 banks in Britain that currently serve continental customers to ask the ECB for a licence, and urged them to get in touch sooner rather than later.
“I do not see the ECB issuing banking licences to empty shell companies,” Lautenschlaeger, who sits on the ECB’s executive board, said in London.
“Our objective is to make the banking system safe and sound. I therefore expect banks which are seeking a licence in the euro area to meet our standards. There will be no race to the bottom in banking supervision,” she said.
Weighing in on the contentious issue of keeping euro derivatives clearing in Britain, Lautenschlaeger said ECB consent would depend on whether the new, post-Brexit legal framework offered an unchanged level of involvement for the ECB, and ensured financial stability in the euro zone.
London dominates the clearing of derivatives denominated in euros, and the ECB is a member of the colleges of supervisors from different jurisdictions which oversees them.
Lautenschlaeger said that apart from remaining in supervisory colleges of euro clearers in London, other, unspecified conditions would have to be met which will depend on what sort of trading deal Britain and the EU agree after Brexit.
An attempt by the ECB to shift euro clearing to the euro zone was blocked by the EU court, but British Prime Minister Theresa May has said the UK will no longer come under the court after Brexit.
Banks in Britain that plan to permanently opt for “back-to-back” – trades transacted on the continent being booked in London to cut costs – will be disappointed, she said.
“This is not about a full ban of back-to-back booking. We rather aim at ensuring both an adequate local management of all material risks and the resolvability of the euro area entity,” she said.
“Needless to say that I would certainly not accept banks booking all exposures with the euro area entity while having their risk management and internal control systems outside the euro area,” she added.
Some banks are thinking of complementing or even replacing their licensed subsidiaries with investment firms or branches, which are supervised by national watchdogs or not supervised as banks, she said.
But regulators in Britain supervise such large firms as banks, and EU rules could be changed to allow its regulators to do likewise, she said.
“The current review of the European banking rules might provide an opportunity to do so,” Lautenschlaeger said.
By John O’Donnell and Andreas Kröner
6 March 2017
Britain would be “naive” to expect generous trade deals when it quits the European Union, the German minister responsible for its financial centre said on Monday, adding that Frankfurt would grab business from London.
While France has long made no secret about its ambition to take business from London, German politicians have largely avoided such statements and Tarek Al-Wazir’s show a desire in Germany to profit from Brexit, potentially complicating Britain’s attempt to strike a trade deal with the EU.
Al-Wazir, a minister in the state of Hesse, in Germany’s industrial heartland, told Reuters that British politicians were unrealistic in hoping for generous terms for future trade deals.
“It is naive to believe that countries are simply waiting to strike trade deals with Great Britain after Brexit,” he said. “Whoever wants to attract companies with tax cuts cannot expect to be rewarded with generous trade deals. It won’t happen.”
Earlier this year, British Prime Minister Theresa May, when announcing that Britain would quit the European Union’s single market, hinted that it could use tax breaks to fight to attract businesses if the EU imposed punitive tariffs.
Al-Wazir said he expected the clearing of trades in euros, a multi-trillion-euro business, to move from London to centres including Frankfurt, which he is responsible for promoting.
“It is hard to imagine that most business in euros will be booked in London after Brexit. Europe needs access if anything goes wrong. From the ECB’s point of view, London is offshore after Brexit,” he said, referring to the need for the European Central Bank to have oversight of the business.
“You can expect parts of the clearing business to be spread across many continental locations. I’m confident that Frankfurt can attract part of London’s euro clearing business.”
The collapse of merger talks between Deutsche Boerse (DB1Gn.DE) and the London Stock Exchange (LSE.L), however, could complicate this, with some observers predicting that the LSE is now more likely to move clearing to its Paris-based business.
Although Britain is not one of the 19 countries in the euro currency bloc, London dominates trading in the currency.
The trading of euro-based securities spans trillions of euros of derivatives deals as well as the ‘repo’ market providing short-term funding for banks – roughly 2 trillion euros of which experts say is based in London. On top of this, there is foreign exchange trading in the currency itself.
The Frankfurt-based ECB wants oversight of this business for a practical reason: if any disaster were to hit these markets like the 2008 collapse of Lehman Brothers bank in the United States, it would be responsible for dealing with it.
By Gavin Finch, Stephen Morris and John Detrixhe
1 March 2017
Depending on who you talk to, 232,000 U.K. jobs will be headed out the door after Britain withdraws from the European Union. Or it could be as few as 4,000.
The range of forecasts — from the apocalyptic vision of London Stock Exchange Group Plc Chief Executive Officer Xavier Rolet to the conservative estimate, from management consultants Oliver Wyman — often says more about the interests of the people making them than the likely fallout from Britain’s divorce with the EU. As details of the banks’ contingency arrangements become clearer, the initial people moves they are planning are said to be more in the hundreds than the thousands.
The truth is no one knows how many jobs will leave the City of London and Canary Wharf, the two main financial districts. What the U.K. capital will look like after Brexit, and which services banks will be able to provide EU clients from bases in the city, depends on what deal Prime Minister Theresa May wrings from her 27 EU partners. Filling the information void in the meantime are finance executives, lobbyists and politicians jockeying for influence over the makeup of that final agreement.
Bank bosses with their European headquarters in London are among the most vocal. They have the most to lose if U.K.-based firms are stripped of their passporting rights — the ability of companies authorized in one EU country to sell their products freely throughout the $19 trillion economic bloc.
“They are a bit like dogs backed into a corner and barking — it’s just noise,” said Jason Kennedy, chief executive officer of Kennedy Group, a London-based recruitment firm for the finance industry. “This is all about applying as much pressure as possible on the government to get the best deal. What have the banks have got to lose? Scream the house down and see what happens.”
Few are more outspoken than JPMorgan Chase & Co.’s CEO, Jamie Dimon. Before the June 23 referendum he told U.K. staff that as many as 4,000 of them could be relocated in the event of Brexit. In January, he said that number could be even higher — or lower — depending on how the Brexit negotiations played out.
Michelin Stars
That same month, he told May at a meeting of non-U.K. bank chiefs in Davos, Switzerland, that she needed to secure a lengthy transition period guaranteeing ongoing access for all U.K. companies to the single market. Without it, banks, insurance companies and asset managers would head for the exit, with London’s Michelin-starred restaurants and other service industries not far behind, according to a person briefed on the discussion.
HSBC Holdings Plc CEO Stuart Gulliver has taken a similarly hard line. He laid out plans more than a year ago to move 1,000 of the bank’s 5,000 London-based investment banking staff to Paris. While he’s repeated the claim often since, the bank has yet to contact any of the affected employees, Gulliver said last week.
“Each business lobby is motivated — the worse you can make it sound at this point, the more likely your sector will get special treatment,” said Thomas Sampson, assistant professor of economics at the London School of Economics. “I don’t know how analytically rigorous a lot of the numbers are. You want to take a lot of these numbers with a grain of salt.”
This isn’t the first time London’s financial center has used its considerable clout — the industry paid 71.4 billion pounds ($89 billion) in U.K. taxes in the last fiscal year — to try to win concessions from lawmakers. After HSBC considered relocating its headquarters to Hong Kong in 2015, then-Prime Minister David Cameron’s government scaled back a bank levy that particularly irked the lender.
Bluffing Bankers
One senior bank executive, who asked not to be identified discussing his rivals, said he found his peers’ comments disgraceful, characterizing them as attempting to hold the U.K. government hostage with self-serving threats. The banks are bluffing, he said, doubting that the likes of HSBC would move anywhere near as many people as they were threatening to.
Certainly, the jobs the banks are looking to initially move out of the U.K. are not as numerous as once feared. Before the vote, Morgan Stanley was said to be planning to move as many as 1,000 bankers in the event of Brexit. As the bank comes closer to putting its contingency arrangements into action, executives are keeping their options open by initially moving only 300, people familiar with the firm’s plans said last week.
At the other end of the spectrum from JPMorgan and HSBC, Barclays Plc CEO Jes Staley — who has made mending fences with U.K. politicians and regulators a key priority after a series of scandals — said leaving the EU will have little impact on his business. Barclays is planning to move only 150 jobs from London, if any, according to a person familiar with the bank’s contingency arrangements, known as Project Darwin. Of course, of all the world’s big securities firms, his is the most exposed to London.
“Our premise is that London will remain the financial center tomorrow that it is today,” Staley said on a call with journalists last week. “If we need to redeploy assets at the margin, we will. But we’ve been consistent: we don’t believe Brexit will result in a significant move of people away from London.”
A key concern for financiers after the vote was that the U.K. may be stripped of the right to clear euro-denominated derivatives transactions.
Rolet of the LSE, the majority owner of one of the world’s largest clearinghouses for derivatives, told British lawmakers in January that such a move would risk 232,000 British jobs, with many of those headed for New York rather than the Continent. He cited a private EY report that LSE had commissioned, which both parties declined to make available to Bloomberg.
That sum would account for more than 10 percent of the 2.2 million people that the CityUK lobby group says work in finance and related professional services in the U.K.
“I don’t believe that quite that level of jobs is at stake from euro clearing,” said Keith Pilbeam, a professor of economics at London’s City University who forecasts foreign exchange. “A lot of these headline figures don’t make much sense.”
In private, according to people with knowledge of their thinking, bank bosses are downplaying the risks of derivatives clearing leaving London, regardless of what French President Francois Hollande and senior German lawmakers have said repeatedly. Imposing controls on how and where the euro is traded could damage its status as a reserve currency, making the EU unlikely to take a hard line on derivatives clearing, the people said earlier this year.
It’s not just industry executives who are conjuring up ever-larger estimates of how many people will be fleeing. National lobby groups competing to lure refugee bankers from London are also predicting a bonanza — for their cities, at least.
Frankfurt Main Finance’s managing director, Hubertus Vath, said he expects as many as 10,000 U.K. workers to relocate to Germany’s financial capital in the coming years. It’s not clear where they’ll live: there are only 3,000 vacant apartments in central Frankfurt, according to data from property brokers Savills Plc.
Paris has set its sights on luring 20,000 jobs from the U.K. in the coming years, according to Arnaud de Bresson, managing director of the Europlace lobby group. That’s despite only one non-French bank, HSBC, indicating that it will make the city its main base within the EU after Brexit.
One European banking boss quipped that the only way France would be top of his list would be if you turned it upside down.
Business Mirror
27 February 2017
“When the vote took place,” says Valérie Pécresse, “it was an opportunity for us to promote Île de France,” the region around Paris of which she is the elected head. Two advertising campaigns were prepared, depending on the result of Britain’s referendum last June on leaving the European Union. The unused copy ran: “You made one good decision. Make another. Choose Paris region.”
Brexit has made Paris bolder. Once Britain leaves Europe’s single market, the many international banks and other firms that have made London their EU home will lose the “passports” that allow them to serve clients in the other 27 states. Possibly, mutual recognition by Britain and the EU of each other’s regulatory regimes will persist. But no one can rely on the transition to Brexit being smooth, rather than a feared “cliff edge.” Best to assume the worst.
Britain is expected to start the two-year process of withdrawal next month. Given the time needed to get approval from regulators, find offices and move (or hire) staff, financial firms have long been weighing their options. London will remain Europe’s leading center, but other cities are keen to take what they can.
The Parisians are pushing hardest, pitching their city as London’s partner and peer. “I don’t see the relationship with London as a rivalry,” say Pécresse. “The rivalry is not with London but with Dublin, Amsterdam, Luxembourg and Frankfurt.” Especially, it seems, Frankfurt. Paris has more big local banks, more big companies and more international schools than its German rival. London apart, say the French team, it is Europe’s only “global city.” When, they smirk, did you last take your partner to Frankfurt for the weekend?
This month the Parisians were in London, briefing 80 executives from banks, asset managers, private-equity firms and fintech companies. They are keen to dispel France’s image as an interventionist, high-tax, work-shy place. The headline corporate-tax rate is 33.3% but due to fall to 28% by 2020. A scheme giving income-tax breaks to high earners who have lived outside France for at least five years will now apply for eight years after arrival or return, not five. The Socialists, who run the city itself, and Pécresse’s Republicans are joined in a business-friendly “sacred union,” says Gérard Mestrallet, president of Paris Europlace, which promotes the financial center. Pécresse and others play down the risk that Marine Le Pen, of the far-right, Euroskeptic National Front will win the presidential election this spring.
More quietly, Hubertus Väth of Frankfurt Main Finance (the counterpart of Paris Europlace) is “pretty confident” about his city’s ability to attract more bankers. To Väth, the big prize is the clearing of trades in euros, which London dominates but which both Frankfurt and Paris hope to capture. The European Central Bank once tried to force clearing to move from London to inside the eurozone, but was thwarted in 2015 when EU judges ruled it lacked the necessary authority. After Brexit, it may try again.
Nicolas Mackel of Luxembourg for Finance, the grand duchy’s development agency, is relatively “laid back.” All are welcome, Mackel says, but no taxes or regulations have been changed, nor applications fast-tracked. Business has been brisk anyway, because of the duchy’s expertise with fund managers. China’s big banks use Luxembourg as a continental hub.
After a slow start, the Dutch too are trying to gain from any “Brexodus.” The foreign-investment agency has expanded its (small) office in London. The Netherlands offers a high quality of life and almost everyone speaks English. But Amsterdam’s financial center lacks the scale of Frankfurt or Paris, and is short of housing and schools. A cap of 20% of salaries on bankers’ bonuses is also off-putting, although the finance ministry says global banks may be exempt under certain conditions.
Dublin is keen to attract more asset managers. Irish central bankers are worried about whether they have the right expertise to regulate, say, complex trading.
Väth thinks that, with euro clearing, Frankfurt could see an extra 10,000 jobs or more. Arnaud de Bresson of Europlace estimates that Paris stands to gain 10,000 “direct” posts in finance and fintech, plus 10,000-20,000 in law, accountancy and so on. Europlace hasn’t tried to quantify the number tied to clearing.
Different institutions have their own priorities. HSBC, a big British bank, has already said that it expects to move around 1,000 jobs to Paris. Switzerland’s UBS, which also says around 1,000 London jobs are at risk, set up shop in Frankfurt last year. Fund managers not already in Dublin or Luxembourg are likely to head there. Lloyd’s of London, an insurance market, and Blackstone and Carlyle, two American private-equity giants, reportedly favor Luxembourg for their EU home.
James Maddock of Cushman & Wakefield, a property-services firm, says that since 2008, banks in Europe have shifted 34,000 back- and mid-office jobs to Eastern Europe, a further 5,050 to Ireland and 14,200 to British cities outside London. Brexit will involve fewer (if better-paid) people.
By Fabio Benedetti Valentini
3 March 2017
There’s one big thing standing in the way of France luring banking jobs from London after Brexit: the prospect of Frexit.
With Marine Le Pen among the leading presidential candidates, her platform of taking France out of the euro and the European Union is repelling finance executives. If she loses, a more business-friendly leader such as Francois Fillon or Emmanuel Macron could implement reforms that would make Paris more competitive.
“It’s really black or white: with a Le Pen election no foreign firm would consider to move business to Paris,” said Markus Ohlig, a managing director at Greenwich Associates who advises asset managers and banks in Europe and Asia. Fillon and Macron “both have agendas that should create new confidence” for business decisions in favor of Paris.
Le Pen, the candidate of the far right National Front, wants to leave the euro, revoke central bank independence and print a new currency to finance welfare and industrial projects. Polls show the 48-year-old leading in the first round of balloting in April, but losing the May runoff against either Macron or Fillon.
Still, the campaign of the conservative Fillon, a former prime minister, has been rocked by a worsening scandal over the employment of his wife and children as parliamentary aides. And while the 39-year-old Macron, running as an independent, has climbed in opinion polls, he’s never held elective office and the durability of his support is untested.
Twists and Turns
Twists in the campaign have been rippling through the bond market as investors, stunned last year by Britain’s decision to leave the European Union and the election of U.S. President Donald Trump, remain attuned to any possibility of a Le Pen upset. The gap in yield between French 10-year bonds and their German equivalent grew to the widest since 2012 last month.
As Paris vies with Frankfurt, Dublin and other cities for the potential spoils of Britain’s exit, the presidential race is shaping up as a make-or-break event. Pledges by Fillon, 62, to lower taxes, smooth hiring and firing rules and scrap the 35-hour work-week got discreet praise early on from French corporate leaders. Executives are increasingly looking favorably on Macron’s less aggressive reform plans, which he outlined in a presentation Thursday.
Paris currently has about 150,000 finance industry employees, including back-office staff, and could lure 20,000 workers or more from Britain after Brexit, estimated Paris Europlace, the city’s financial lobby group. Four globally systemic banks as well as insurance giant Axa SA have their headquarters in the Paris region. The city is also one of Europe’s biggest asset-management and bond-trading centers.
“The Paris hub is hoping to become more competitive after the elections,” said Arnaud de Bresson, head of Europlace. Officials from the group are in contact with all of the campaign teams and “everyone is listening to and is aware of” our priorities, he said.
French banks BNP Paribas SA and Societe Generale SA have suggested they may repatriate a marginal number of jobs to France following Brexit.
London-based HSBC Holdings Plc is the only big foreign bank that’s indicated it will relocate employees to Paris. Chief Executive Officer Stuart Gulliver said in January that staff generating about 20 percent of its London investment-banking revenue may move to the French capital. HSBC already owns one of the country’s top consumer-banking networks.
HSBC’s choice might remain an isolated case unless France’s next president reduces the country’s disadvantages in terms of tax levels and labor costs.
“It’s maybe an exaggeration to say, but probably close to reality: eliminating a job takes three days in London, three months in Switzerland, three years in Paris,” Jean-Frederic de Leusse, head of UBS Group AG’s French unit, told senators in Paris in February. “Clearly the new French government’s policy will be looked at and will matter in the choice,” but so far there isn’t “enough visibility” to decide on Brexit-related moves, he said.
Financial Times
27 February 2017
Imagine if the 18th century had taken an odd turn and what is now Ontario, Canada, had become part of the US. Then suppose that through another quirk Toronto, not New York, had become the region’s capital markets hub. Finally, assume that for some reason Ontario seceded from the US in 2016.
This may be hard to picture. But it is easy to guess the US reaction if Ontario then announced that it would be best for everyone if Toronto remained the market centre, but that Ontario would set its own market rules — and that it wanted the US to declare Ontario’s rules equivalent to those of the US for cross-border trading. The US might reply with a plan to wall up its northern border.
This thought experiment clarifies the challenge for the UK as it tries to negotiate an “equivalence” regime with the EU for financial services. Surely the EU has been sensible to emphasise that it wants a strict monitoring of regulatory regimes declared equivalent, and the right to withdraw the designation at will. If the EU backs down on this, it would be effectively allowing the UK to set rules for it, given that London is the biggest trading hub in the region.
Similarly, the UK will not be a rules-taker, accepting whatever regulation Brussels turns out, in return for the right to trade freely with the continent. Britain did not vote to leave the EU only to accept its rules on bankers’ bonuses or the taxation of financial activity.
Yet there is more common ground than might appear. Each side has a deep interest in access to the other’s markets; the logistics of establishing fully separate systems are nightmarish, and neither side, in the end, has full control of where financial activity happens.
On the first point, not only do City funds and banks sell shares, debt, and derivatives across the EU, but Europe depends on the deep London market. UK banks hold £1.1tn in loans to European companies, the Bank of England says. Half of Italy’s sovereign debt is sold to UK-based companies, reckons the British Bankers’ Association.
Still, the European authorities might imagine that they can bring City business across the channel — if necessary, by requiring that EU institutions trade only with other institutions under EU jurisdiction, and clear euro-denominated trades only within the bloc. This would in theory force UK-based institutions to establish capitalised subsidiaries in the EU.
One wonders, however, how the UK could be singled out. Is the EU prepared to limit the range of European or euro-denominated products that can be traded in New York or Hong Kong? Markets operate 24 hours a day: they will not wait for morning in Frankfurt.
A discussion of what both sides want from equivalence is needed. Then, in the words of the EU chief negotiator Michel Barnier, “comparable and consistent” rules can be written, and it becomes “reasonable to . . . recognise the activities regulated under them as compliant”.
Such things have been done before, as when Europe and the US agreed on clearing houses in connection with the US Dodd-Frank reforms. Most importantly, such an agreement would need a mechanism to resolve the disputes that will arise.
The politics of Brexit may prevent a sensible deal. The UK should walk away if Europe demands that it becomes a regulatory vassal; the EU cannot allow the UK to de facto set its rules. Both sides should remember that markets find a way to subvert governments that fiddle the rules too much. And the markets are right to resist: it is not governments’ money.
Gulf News
6 March 2017
JPMorgan Chase & Co. is scouting for office space in Dublin and Frankfurt that may be used as an enlarged European Union hub following the U.K.’s vote to leave the bloc, according to people with knowledge of the matter.
The lender may lease 50,000 square feet (4,645 square meters) to 150,000 square feet of space and wants flexibility from landlords to shrink or expand depending on the outcome of the Brexit negotiations, some of the people said, asking not to be named because the plans aren’t public. That amount of space would be enough for several hundred employees.
“Other options are still very much on the table,” the bank said in a statement. “We want to see how negotiations progress. No final decisions have been made.”
UK. Prime Minister Theresa May’s plan to pull Britain out of the single market has prompted international banks to begin looking to move jobs to the continent. London could lose 10,000 banking jobs and 20,000 roles in financial services as clients move 1.8 trillion euros (Dh6.98 trillion; $1.9 trillion) of assets to the continent after Brexit is completed, according to think tank Bruegel. Other estimates range from as much as 232,000 jobs to as few as 4,000.
Before the June 23 referendum Chief Executive Officer Jamie Dimon told UK staff that as many as 4,000 of them could be relocated in the event of Brexit. In January, he said that number could be even higher — or lower — depending on how the government’s negotiations played out.
Frankfurt and Dublin are emerging as the favoured destinations for banks preparing to flee London after Brexit. Standard Chartered Plc and Barclays Plc are considering the Irish capital for their EU base while Goldman Sachs Group Inc., and Morgan Stanley are weighing Frankfurt.
JPMorgan already has subsidiary units in Ireland and Germany with broker/dealer licenses.
By Esha Vaish and Noor Zainab Hussain
27 February 2017
Lloyd’s of London underwriter Hiscox Ltd (HSX.L) was in talks with regulators in Luxemborg and Malta over setting up a new insurance base in one of the countries to service European Union clients after Britain leaves the bloc, its chairman said.
Hiscox, which underwrites a range of risks from oil refineries to kidnappings, said it expected to begin the process of incorporating the legal entity in the first half of 2017, so that it could write new business using the new base before the end of 2018.
“Looking from our business point of view at the moment, those two locations look to be the best,” Non-executive Chairman Robert Childs told Reuters, adding that the London market was navigating its way through a challenging trading environment.
Many London-listed insurers are drawing up plans to move some business to Europe if they lose their right to sell their products across the bloc due to Brexit.
Industry sources involved say many UK-regulated ship insurers are considering jurisdictions such as Luxembourg and Cyprus, while some other insurers have indicated that Dublin may be a favoured pick.
Hiscox said on Monday an EU base would help it grow and expand its European business, which employs 300 people, underwrites 174.7 million pounds ($217 million) in premiums and has a combined ratio of 86.3 percent.
The Bermuda-based company reported a 24 percent rise in group gross premiums written to 2.402 billion pounds for the year ended Dec. 31, while net premiums rose 17 percent to 1.675 billion pounds.
Childs declined to specify whether the move to underwrite EU business from Luxemborg or Malta had altered recruiting plans for the company which employs over 2,000 people.
“We are recruiting as necessary wherever we need to”, he said, adding that the company was focused on growing its retail lines business, where it still had a relatively small share of the market in Europe, the UK and the United States.
Hiscox has focused on growing the retail lines business, which underwrites fine art and ransom to property and media, as big-ticket insurance businesses face rate pressure due to stiffer competition for larger premiums.
General Brexit news:
1 March 2017
The government has been defeated after the House of Lords said ministers should guarantee EU nationals’ right to stay in the UK after Brexit.
The vote, by 358 to 256, is the first Parliamentary defeat for the government’s Brexit bill.
However, MPs will be able to remove their changes when the bill returns to the House of Commons.
Ministers say the issue is a priority but must be part of a deal protecting UK expats overseas.
The bill will give Theresa May the authority to trigger Brexit under Article 50 of the Lisbon Treaty and begin official negotiations.
The amendment backed by the Lords requires the government to introduce proposals within three months of Article 50 to ensure EU citizens in the UK have the same residence rights after Brexit.
But it could be overturned when MPs, who have already backed the Brexit bill without amendments, vote on it again.
The government is expected to attempt to overturn the defeat when the legislation returns to the Commons.
The Department for Exiting the EU said: “We are disappointed the Lords have chosen to amend a bill that the Commons passed without amendment.
“The bill has a straightforward purpose – to enact the referendum result and allow the government to get on with the negotiations.”
The government said its position had “repeatedly been made clear”, saying it wanted to guarantee the rights of EU citizens and British nationals “as early as we can”.
Ahead of the vote, the government made a last-minute attempt to persuade peers not to change the draft legislation.
Brexit Minister Lord Bridges said the government had been keen to reach an agreement with other EU nations on the issue.
However, he said, “a small number of our European counterparts” insisted there could be no discussions until the formal Brexit talks begin once Article 50 had been invoked.
But most peers wanted a unilateral move from the UK government.
Labour’s shadow Brexit minister Lady Hayter said the concerns of EU nationals here and British expats living in Europe shouldn’t be “traded against each other”.
She added: “These people need to know now – not in two years’ time or even 12 months’ time. They simply can’t put their lives on hold.”
Seven Conservative peers voted in favour of the amendment, which was proposed by Labour with the support of the Liberal Democrats.
Among those opposing it during the sometimes heated exchanges was former Conservative cabinet minister Lord Tebbit, who said the debate seemed to focus on “nothing but the rights of foreigners”.
Shortly after the Lords vote, MEPs in the European Parliament debated the status of EU migrants in the UK.
Justice Commissioner Vera Jourova told MEPs that EU citizens in UK and British citizens elsewhere in the EU “deserve to know that their rights will be” after Brexit.
She said the matter should be addressed “as soon as possible” but that negotiations could only begin after the UK has triggered Article 50.
By John Detrixhe
6 March 2017
One of London’s crown financial jewels — a business sought after by the rest of Europe — is shining brighter than ever before.
The U.K. capital’s LCH clearinghouse is the world’s biggest for interest-rate swaps, a market where trading has marched steadily higher in every survey since 1995. Last year, LCH’s swap clearing business enjoyed a 25 percent jump in volume to $666 trillion. And the regulatory incentives giving those operations a tailwind are just getting stronger.
But LCH has a major distraction: Continental Europe thinks it’s located on the wrong side of the English Channel. That’s raised questions about whether its customers would begin seeking other options. With less than a month until Britain’s withdrawal from the European Union is set to begin, LCH’s majority owner says business is going great so far.
There have been no “indications of business frittering away,” Xavier Rolet, chief executive officer of LCH parent London Stock Exchange Group Plc, said Friday in an earnings call. “Our market share is growing everywhere.”
LCH dominates clearing in a market where $1.9 trillion changes hands every day, and it seems poised to grow. Federal Reserve policy could boost volatility and demand for interest-rate swaps along with it. Heavy issuance of government and corporate bonds has amplified the need for a way to hedge those assets.
France and Germany didn’t like LCH’s dominant role in clearing euro derivatives before the Brexit vote in June, and officials there say it can’t be tolerated now. Francois Villeroy de Galhau, governor of the French central bank, made one of the first threats and others have followed since.
Hubertus Vath, managing director for Frankfurt Main Finance, acknowledged that the swaps clearing business is expected to shine brightly and has “well above average growth rates.” A clearinghouse’s job is to contain derivatives defaults, preventing a shock from spilling out into a financial tsunami. If there’s another derivatives crisis, big ones like LCH will almost certainly be at the center of managing the fallout.
“There’s a very strong political will, as well as a financial stability aspect, to moving euro clearing away from London,” said Vath, whose group is tasked with bringing business to the German financial hub.
Besides its systemic importance, clearing helps support an ecosystem of thousands of finance, technology and legal jobs. And while LCH clears derivatives across the spectrum of major currencies, stripping out euro swaps would threaten the entire business. Customers prefer to clear as much as possible in the same place, making the process cheaper and more efficient.
LCH’s three-letter acronym comes from London Clearing House, a firm with roots going back to at least the 1800s. Its offices are in the City of London’s Aldgate area, which in the Middle Ages was fortified to protect against foreign invasion.
In this century, the invader is the European Central Bank, which has tried before to capture LCH’s euro business. In policy documents before Brexit, the central bank said the back-office plumbing, given the systemic importance, should be located in the euro area. More recently, ECB President Mario Draghi has said its supervision should at least be preserved, if not improved.
LCH, meanwhile, is growing. The amount of customer collateral it holds has risen to nearly $100 billion, according to Clarus Financial Technology, a 43 percent increase in the past year. Volumes in its swap-clearing unit rose 25 percent last year and membership increased, LSE said in an earnings release Friday. The clearinghouse made up more than a quarter of LSE’s total income last year.
Interest-rate swaps stand out for the sheer size of the market, which only debuted in the early 1980s. They’re used to hedge or speculate on interest-rate risk, with the biggest usage coming from Wall Street banks, pensions and hedge funds.
LCH has been one of the biggest winners from that shift. Most of that market is processed through clearinghouses now, thanks mainly to regulations, and 90 percent of that goes through LCH’s 18-year-old SwapClear unit.
LSE’s CEO saw the potential in 2012 and bought a majority stake in the clearinghouse. A powerful regulatory tailwind, called mandatory clearing, was part of the reason for the deal. The requirements are being phased in around the world, which will drive even more swaps clearing into LCH.
“I would see it growing for a while,” said Amir Khwaja, CEO at Clarus in London, referring to the size of the interest-rate swaps market. “LSE is very lucky to have that business.”
By Andrew MacAskill, Anjuli Davies and William Schomberg
2 March 2017
Britain has sidelined the minister responsible for financial services from addressing the impact on the sector of leaving the EU, a shakeup that a senior bank executive called a “vote of no confidence” in the industry’s main government contact.
Lucy Neville-Rolfe, commercial secretary at the Treasury, has had Brexit’s impact on financial services added to her official portfolio, the Treasury said on Wednesday, confirming a change that had been made without fanfare several weeks ago.
The new arrangement means Simon Kirby, the Treasury’s economic secretary, is no longer in charge of overseeing the impact of Brexit on Britain’s large banking sector.
Kirby’s post is known informally as “City minister”, as the government’s liaison to the finance industry based in the City of London, the capital’s banking district.
“Clearly, it’s a sign of a vote of no confidence in Kirby,” said one senior bank executive, one of several industry figures who discussed the change in roles on condition of anonymity to avoid taking sides publicly in a political personnel matter.
“Kirby is not responsible for Brexit even though it’s the biggest issue facing the City.”
Neville-Rolfe and Kirby both report to finance minister Philip Hammond. Kirby is listed ahead of Neville-Rolfe in the ranking of junior ministers on the Treasury’s website.
The Treasury said Kirby would still have the same role as his predecessors as City minister, overseeing the government’s overall relationship with the financial sector. Having a second minister look at Brexit reflected “the importance we place on this area”, it said in an email to Reuters in response to a request for comment on the change.
Kirby will still be responsible for answering questions from lawmakers in the House of Commons while Neville-Rolfe will lead in the upper House of Lords.
“Although the lack of continuity at this point in the process is alarming, frankly we don’t care who it is the government chooses to oversee the process, as long as they can provide some clarity to the financial services sector,” the opposition Labour Party’s City spokesman Jonathan Reynolds told Reuters in an emailed statement.
“The government must start providing some answers and guidance.”
Of the seven people who have held the post of City minister since it was created in 2008, Kirby, 52, is the first without either a background in financial services or a PhD in economics.
Britain’s position as Europe’s financial centre is emerging as one of the main issues of contention in talks over the terms of its exit from the EU. Some European politicians see an opportunity to challenge British dominance of finance after decades of viewing its free-wheeling “Anglo-Saxon” model of capitalism with suspicion.
The industry figures who spoke to Reuters said bankers in London had been complaining quietly for months that Kirby, who founded a radio station and a chain of nightclubs in the seaside town of Brighton before going into local politics, seemed to lack expertise in their field.
Several said their concerns grew after a meeting Kirby held with senior finance executives in November, at which he appeared unable to answer questions about government policy. They said they were happier with Neville-Rolfe, 64, a former senior civil servant, executive at Britain’s biggest supermarket chain Tesco and non-executive director of a number of large businesses.
The Guardian
By Rajeev Syal
5 March 2017
Philip Hammond has sent a warning to Britain’s European partners that Britain will “fight back” and not “slink off like a wounded animal” if it does not get the Brexit deal it wants.
In combative language ahead of triggering the article 50 negotiations on terms of withdrawal, the chancellor said Britain would “do whatever we need to do” to be competitive in the event of leaving the EU without a trade agreement.
The use of such language flies in the face of calls from Sir John Major to tone down anti-EU rhetoric before negotiations begin.
In an interview on the the BBC’s Andrew Marr Show, Hammond said: “If there is anybody in the European Union who thinks that if we don’t do a deal with the European Union, if we don’t continue to work closely together, Britain will simply slink off as a wounded animal, that is not going to happen.
“British people have a great fighting spirit and we will fight back. We will forge new trade deals around the world. We will build our business globally.
“We will go on from strength to strength and we will do whatever we need to do to make the British economy competitive.”
Former prime minister Major said last week that Theresa May’s government must avoid souring the article 50 negotiations with “cheap rhetoric” and give voters an honest warning about the risks of Brexit.
Hammond went on to confirm that the government is prepared to cut business taxes to attract investment away from the EU – a move that is widely seen as leading to further public sector cuts.
He told Marr: “We are going into a negotiation. We expect to be able to achieve a comprehensive free trade deal with our European Union partners, but they should know that the alternative isn’t Britain just slinking away into a corner.”
The comments came after a Lords report stated that Britain could legally walk away from the EU without paying a penny if there is no trade deal.
The chancellor made some conciliatory comments, and indicated the UK would pay any Brexit bills it owed to the EU.
“We are a nation which abides by its international obligations. We always have done, we always will do, and everybody can be confident about that,” he said.
Hammond indicated he would take a cautious approach in Wednesday’s budget.
A report in the Sunday Times claimed the budget would be used to build up £60bn in case of turbulence as the UK withdraws from the EU.
Hammond said he saw his role as ensuring “that we have got reserves in the tank, so as we embark on the journey that we will be taking over the next couple of years, we are confident that we have got enough gas in the tank to see us through that journey”.
Asked about a report in the Sun on Sunday that the chancellor was set to provide more than £1bn for social care in the budget, Hammond said: “I recognise in particular that social care, and local authorities delivering social care are under some pressure. This isn’t just about money. We should remember there are many authorities managing extremely well.”
The chancellor rejected calls from Labour’s John McDonnell for him to publish his tax returns.
“No. I have no intention of doing so. Just for the record my tax affairs are all perfectly regular and up to date. But I think this demonstration politics isn’t helping the atmosphere in British politics.”
The Guardian
By Rowena Mason
6 March 2017
Theresa May will not allow MPs and peers a proper veto over her Brexit deal in case it gives the EU the incentive to offer the UK bad terms, her spokesman has said.
The prime minister believed the UK must not allow the establishment of a process that encouraged EU countries to scupper Brexit, he said on Monday.
The warning came on the eve of a House of Lords debate about giving MPs and peers a meaningful vote at the end of two years of talks with Brussels. Parliament is currently only being offered a “take it or leave it” vote: accept May’s Brexit deal or leav e the EU with no deal, and trade on World Trade Organisation terms instead.
However, peers are expected to vote on a cross-party basis for parliament to have the power to reject May’s deal and send her back to the negotiating table if it does not like what she has achieved.
Asked why the government would not accept a more meaningful vote, May’s official spokesman said: “The PM believes we should not commit to any process that would incentivise the EU to offer us a bad deal.”
He said any deal that could be rejected by MPs would “give strength to other parties in the negotiation. We believe it should be a simple bill in relation to triggering article 50 and nothing else.”
Downing Street’s position indicates the government will not accept any amendment passed by the Lords in relation to a vote at the end of the two years of negotiations. It is also sticking to its stance of refusing to guarantee the rights of EU citizens living in the UK until a similar guarantee is achieved for UK citizens in the rest of the EU.
The House of Lords voted by 358 to 256 last week in favour of guaranteeing the rights of EU citizens in the UK as part of its scrutiny of the Brexit bill. MPs are likely to reverse that change when the legislation returns to the Commons, and peers are expected to back down after that in order not to block the passage of the bill by the end of March, when May wants to trigger article 50.
By Richard Partington
28 February 2017
David Whitehouse has two business cards: one for his office in London’s Shard skyscraper, the other for a rundown building in Manchester.
Most days, the Duff & Phelps Corp. restructuring specialist works up north in Manchester, a city better known as the 19th-century heart of Britain’s industrial revolution than as a financial center. A couple of days each week, he catches the 6:59 a.m. train to the nation’s capital, just two hours away.
“We’re literally a suburb of London,” Whitehouse said. With Brexit looming, what may be bad for London could also hurt the U.K.’s regions. “We want Manchester to remain a key financial-services hub. We don’t want to yield ground to Dublin, and that is a very real risk.”
Ask Britons where the majority of the country’s 2.2 million finance workers are located and most would probably say the City of London. But two-thirds are located outside the U.K. banking hub in cities from Edinburgh to Birmingham and Manchester, according to a report published Tuesday by TheCityUK. Financial and related professional services contributed 176 billion pounds ($219 billion) to the U.K. economy in 2015, with more than half generated outside the capital.
The lobby group is laying out the national scope of the finance industry just as Prime Minister Theresa May prepares to extract Britain from the European Union, a decision backed by every U.K. region barring London, Scotland and Northern Ireland. Although the focus has been on whether London’s finance jobs might move to Frankfurt, Dublin or Amsterdam, there’s growing concern jobs outside the capital might also be at risk.
The industry’s reach could put May under pressure to defend finance in the Brexit talks despite refusals from within her government to grant it special status. A report by the British Bankers’ Association last week estimated that 90 of the top 100 parliamentary constituencies with the highest share of banking lay outside the capital.
“You can’t just think it’s a London issue,” said Steve Cooper, chief executive officer of personal banking at Barclays Plc. “There are issues for both London and the wider U.K. around Brexit, so managing the transition to whatever the outcome will be needs to be very well considered and very well thought through.”
Cooper makes regular trips from Barclays’s Canary Wharf headquarters to its global technology hub in the leafy English county of Cheshire, where 3,200 employees work in a former manor house named Radbroke Hall. The bank invested 15 million pounds at the site, tests ATMs in an outbuilding and runs a so-called global command center filled with monitors that resembles the bridge of Star Trek’s U.S.S. Enterprise.
Global firms have spread staff outside London to cut costs, and the scale of their operations can be vast. JPMorgan Chase & Co. employs 4,000 in Bournemouth on England’s south coast, while Bank of New York Mellon Corp. has 1,300 staff in central Manchester, led by Matt Wells, the head of global cash operations. Deutsche Bank AG has hundreds of investment-banking jobs in Birmingham, while HSBC Holdings Plc is moving about 1,000 employees to the midlands city from London.
Brexit Impact Unclear
Overall, 21 British towns and cities have more than 10,000 people working in finance, according to TheCityUK. It’s unclear how many jobs outside London might be affected by Brexit, which could depend on the deal Britain gets for accessing the EU single market and clearing euro-denominated derivatives.
More than a trillion dollars of Bank of America Corp.’s foreign exchange and derivatives deals are processed daily from a quiet business park near the small northern city of Chester. It’s the bank’s largest European office outside London and one of three global hubs for booking trades alongside Singapore and the lender’s home of Charlotte, North Carolina. Staff numbers have rocketed from a handful six years ago to more than a thousand.
“Clearly London is massively important to us, but so is Chester,” said Stephen Miller, who moved to the city as Bank of America’s global head of foreign-exchange operations.
From Chester to Liverpool, a distance shorter than the London Underground’s Central Line, Andrew Morris sits behind a walnut table in a room with a golden spyglass overlooking the river Mersey, where transatlantic liners once departed for New York.
‘Dark Arts’
“For a lot of people, finance is the dark arts,” said the fund manager, who helps oversee 32 billion pounds at Rathbone Brothers Plc, a firm founded in Liverpool in 1742 by a family of timber merchants who grew rich on maritime trade. “People don’t understand the true benefits it brings us as a nation.”
While its main office is now in London, Rathbone employs about 500 in the Port of Liverpool Building, part of the city’s UNESCO World Heritage waterfront. “People haven’t come to a backwater,” Morris added. “There are highly skilled jobs here.”
Investment bank Rothschild has been in Manchester for 50 years, but traces its links back much further to Nathan Mayer Rothschild, the first of the banking dynasty to leave the family’s Frankfurt home in the 18th Century. He worked in the city’s then-booming textile industry before founding NM Rothschild & Sons in London in 1810. The firm’s current leading banker in the region, Andrew Thomas, travels into the office by tram or commutes from Manchester Airport to client meetings as far away as Mexico City or New York.
“You sometimes come across people who don’t know Rothschild has a presence outside London,” Thomas said, adding that the firm’s Manchester base helps to win regional deals and can attract staff looking for a better quality of life than in cramped London.
Reassuring Investors
There are about 215,000 finance and related professional services roles in the North West of England, making it the U.K.’s biggest location for such jobs outside London and the South East, according to TheCityUK.
At its heart is Manchester and the city’s financial district of Spinningfields, a miniature Canary Wharf developed after a Provisional Irish Republican Army bomb in 1996 wrought 1.2 billion pounds of damage. The majority of Royal Bank of Scotland Group Plc’s 5,300 staff in the city are based there, while Barclays and accountancy firm Deloitte also have offices.
“Clearly, there is a degree of uncertainty,” said Richard Topliss, a managing director at RBS based at its Spinningfields offices and chair of the Manchester Growth Company, a development agency. “That will necessitate work both by local and national government to reassure potential investors, in financial services or other sectors in the U.K.”
Evening Standard
By Patrick Grafton-Green
4 March 2017
London is no longer the most expensive city in the world in which to live and work, a study has found.
The capital has previously topped lists for cost of living, but is now ranked third behind New York and Hong Kong, according to estate agents Savills.
Experts said the drop from number one to three on the list of the most expensive cities on earth was in part due to the fall in the value of the pound after the Brexit vote.
The estate agents said accommodation for the average Londoner – calculated as a total of housing and office rental costs – now stands at a total of £71,000.
Top ranked New York (£90,700) and Hong Kong (£85,000) are both now more expensive than the capital.
London now ranks closer to Paris (£60,900) and Tokyo (£60,000).
This is according to the latest Savills Live-Work Index, which is put together annually as an indicator for companies of the cost of doing business in different world cities.
With housing costs a major factor, the data gives an idea of the cost of living for professionals in the capital relative to other global cities.
By this measure, London is now 10 per cent cheaper than it was in December 2008.
Yolande Barnes, director, Savills World Research, said: “The real test of whether a city is good value for occupiers lies in how productive an organisation can be in that city and how competitive a city is in attracting human capital to its job market.
“Cities may become more or less competitive on a short term basis but it is their long term costs that need to be taken into consideration when signing leases or building accommodation.
“For successful organisations, business location is a long-term play, not a short-term decision so sound business fundamentals are of course far more important than decisions based on the cost of accommodation at a given point in time.”
“London’s relative advantage may be eroded if sterling rallies but our view is that the appeal of London as a world city will continue.”
Other English-speaking cities such as San Francisco, Los Angeles and Sydney are also found in the top 10.
And elsewhere Dublin and Berlin, both often cited as potential post Brexit alternatives to London, still represent savings of over £30,000 and almost £50,000 respectively.


Select Milano Monitor 27/02/2017

20 February 2017
Summary from Italian:
·         Milano-CyberParco, the non-profit founded in 2015 to promote the establishment of a Euro-Mediterranean hub for cybersecurity companies and start-ups in Milan, and Select Milano have announced that they have signed a “convergence protocol” to take joint action to promote Milan as a financial capital within the Eurozone as well as via the cybersecurity industry.
·         CyberParco President Stefano Mele stated that the new joint initiative with Select Milano will bring new synergy and expertise to the movement to promote Milan and grow the economy.
·         Bepi Pezzulli asserted that if a financial district contributes to the robustness of an economy, a cybersecurity district will help accelerate growth; the industry ranks among the top 10 emerging sectors with total sales estimated at over $180 billion by 2021.
·         The convergence of initiatives aims to aggregate the two groups to create a competitive ecosystem in Milan.
Milano Finanza
By Paola Valentini
23 February 2017
Summary from Italian:
·         American investment company Vanguard (#1 in world for mutual funds, #2 for ETF assets) will soon open an office in Milan. It has its European headquarters in London, but is expanding its European strategy with a focus on Amsterdam, Zurich, Milan and Paris.
·         Select Milano asserts that if London will continue to grow as a global financial centre, Milan has all the characteristics to be a regional financial centre. This move by Vanguard seems in tune with this idea.
Business Insider
By Francesca Vercesi
25 February 2017
Summary from Italian:
·         While some financial firms are already moving some employees out of London post-Brexit, tech giants seem to be moving employees into London. Some institutions note the growing trend of populism around the world (i.e. Trump, Brexit) as affecting investment outlooks.
·         HSBC, for instance, is moving some business units to Paris, and even the University of Oxford has mulled the idea of opening a campus in Paris (presumably to avoid losing EU funds).
·         President of Equita, Alessandro Profumo, recently stated that Milan is ready to intercept the financial assets that London will have to abandon post-Brexit.
·         Milan’s first successes include the transfer of Italian personnel to the city from London by Credit Suisse and Deutsche Bank.
·         Select Milano believes that such moves could be the beginning of a long wave. Bepi Pezzulli notes that Milan is a strategic financial centre with brand new measures to address taxation and financial arbitration in the city (with the author further elaborating on the relevant measures). LSE Group holds strong pre-existing ties with Milan, so gaining post-Brexit business like euro clearing would be mutually beneficial.
·         CONSOB chair Giuseppe Vegas has asserted that a reduction in bureaucracy would help to attract more business following Brexit, and that Milan would be an ideal location for companies leaving the UK.
La Repubblica
27 February 2017
Summary from Italian:
·         The LSE-Deutsche Boerse merger is in danger given the LSE’s refusal to give up its stake in MTS – the Italian company that deals in the trading of government bonds. This would be a “disproportionate” sacrifice as negotiations between the two exchanges seek to solve competition problems.
·         The Commission “unexpectedly” raised new doubts about whether the sale of the French arm of clearing house LCH was a sufficient remedy in regards to access to bond and repo trading feeds currently provided by MTS.
·         Bepi Pezzulli asserted that the LSE Group’s acquisition of the Italian Stock Exchange a decade ago was not solely focused on the Milan Stock Exchange, but on MTS, cash clearing and Monte Titoli given the role of these assets in managing systemic risk and developing the banking market. He further notes that given that the LSE holds in its hands the infrastructure market of Italy, there is strategic interest in moving euro clearing to Milan, providing the Eurozone a solution to deal with the Brexit issue.
Milano Finanza
By Giovanni Panzera da Empoli
25 February 2017
Summary from Italian:
·         The opportunities for Milan granted by Brexit have the potential to be side-lined by three existing financial transaction taxes in Italy. The country hopes to attract financial institutions post-Brexit, but the taxes affect the very transactions that the country wishes to attract. Other countries do not have such taxes (aside from France).
·         Revenues from transaction taxation have fallen far short of the expected €1.1 billion; 2015 revenues were €480 million. These extra trading costs make Italy one of the most odious markets in Europe.
·         Many observers wonder if it is time for a greater harmonisation strategy across Europe to avoid a miscellany of national rules and regulations which would help strengthen the single market.
ETica News
20 February 2017
Summary from Italian:
·         Finance Minister Pier Carlo Padoan announced during a recent meeting in Milan that Italy is not considering the elimination of the Tobin Tax; he responded this when asked a question on whether or not the elimination of this tax could attract financial institutions from London to Milan post-Brexit.
·         Select Milano’s role in the campaign for the elimination of the tax is mentioned.
Milan and Brexit:
25 February 2017
Summary from Italian:
·         A meeting will take place on Tuesday between Milan Mayor Giuseppe Sala and PM Paolo Gentiloni, with the focus being on the development of the Lombardy region and the European Medicines Agency.
·         Sala confirmed that a technical visit to London will take place to better understand the institution and the spaces it requires.
·         Sala may also have a meeting with former PM Matteo Renzi in the near future.
Milano Today
21 February 2017
Summary from Italian:
·         Italy’s competition in the race to host the European Medicines Agency includes the Netherlands, Ireland, Denmark, Austria, Hungary, Portugal and Sweden.
·         A key contributing factor in the determination of the target city is the satisfaction of researchers – this can include employment opportunities for spouses of EMA researchers and staff, as well as high-level schools for their children.
·         An extensive transportation network is also key to the transfer of the EMA given that the institution has 36,000 monthly visits from experts across Europe.
The Guardian
By Jon Henley
21 February 2017
Continental competition to benefit from Brexit is rapidly heating up as half a dozen EU cities vie to attract London-based banks and financial services companies worried about losing their access to the single market.
From Paris to Vilnius, Milan to Madrid and Frankfurt to Valletta, regulators, local authorities and sometimes national governments are clearing a path for the exodus many feel is coming as Theresa May’s deadline to start negotiations nears.
Each has its plus points – liveability, connectivity, reliability. Each also has its drawbacks: too provincial, difficult language, inflexible labour laws. What all have in common is a desire to cash in.
The prize is certainly substantial: estimates of how many of the City’s 350,000-plus finance jobs could move to the continent if London loses passporting rights that allow a UK-licensed firm to trade across the EU have ranged from 35,000 to 70,000.
But the politics are awkward. With populist, anti-EU parties set to fare well in elections in France, Germany and the Netherlands this year, governments are understandably wary of being seen to bend the rules for bankers.
“There’s a limit to what any of us can realistically do,” said one trade official at an EU embassy in London. “Of course everyone wants a slice of the City pie. But there aren’t many votes in giving special treatment to financiers.”
Most aggressive – and ambitious – is Paris. Long jealous of London’s dominant role in EU finance, the French capital sees Brexit as a unique opportunity if not to take over from the City, at least to redress a historic imbalance.
Vaunting an enviable quality of life and a sizeable finance sector of 180,000 workers, Paris, home to some of Europe’s largest banks and the Euronext Paris stock exchange, hopes to snaffle 20,000 City jobs, its lobby group Europlace said.
France’s finance watchdog and securities regulator have done their bit: London-licensed operators can now get “pre-authorisation” to open in Paris within a fortnight and even do the paperwork in English.
As part of the same government-backed red-carpet rollout, Paris has also pushed through one of the EU’s most generous expat tax regimes, including tax breaks of up to 50%, in the hope of pulling in international high earners.
But while France has plainly moved on from the days when François Hollande could say his true enemy was “the world of finance”, major players remain wary of the country’s rigid employment laws.
The government is reportedly exploring possible workarounds, including a special hiring-and-firing regime for banks in specific EU classifications, but it remains an extremely sensitive subject.
Frankfurt faces a similar problem. Home to the European Central Bank, the Bundesbank, the EU insurance authority and Germany’s financial regulator, it sees itself as a stable, sensible and respected European financial hub.
While not as aggressive as Paris, the state of Hesse is reportedly also exploring ways to change strict German worker protection rules so banks could fire high earners as easily as they can in London – although Berlin has signalled it does not agree.
Frankfurt, which is seeking partnership with London rather than competition, must contend with its perception as a drab place to live: finance workers used to London may see Paris or even Amsterdam as more appealing than a provincial German city with fewer than 700,000 inhabitants.
Highly competitive on tax, and unhampered by continental labour laws, Dublin is a serious contender. It boasts the EU headquarters of Google, Facebook, Twitter and LinkedIn, plus subsidiaries of more than half the world’s leading financial services firms, according to its International Financial Services Centre.
The city’s pitch is also based on its belief that as the EU’s only English-language country, it is an obvious choice. Insurance companies in particular have already begun setting up subsidiaries, and Ireland’s Industrial Development Agency says more than 100 financial services companies have shown interest.
It, too, has its drawbacks: the city suffers from a serious shortage of quality residential and commercial property for rent. But the government is determined, unveiling in its budget last autumn a full-blown Getting Ireland Brexit Ready programme, including tax relief for foreign firms relocating staff.
Appealingly low-tax Luxembourg, home to 143 banks with assets of some €800bn and the EU headquarters of companies such as Skype and Paypal, bills itself as “the only country that still loves bankers” and has also reported strong interest from international financial services firms exploring post-Brexit options.
Also in the race is Amsterdam, home to the EU offices of Uber, Tesla and Netflix as well as one of the world’s largest data transport hubs. It is unashamedly going after sectors such as fintech, high-frequency trading and above all London’s euro clearing business.
The Dutch capital hopes its central European location and advanced digital infrastructure will attract heavily tech-reliant financial services firms that will prove a better fit for Amsterdam’s relatively sober financial culture.
The Netherlands has been notably tough, for example, on bankers’ bonuses, which are limited to 20% of salary, and unequivocal (in the form of a speech by finance minister Jeroen Dijsselbloem) about the fact that it is not out to attract Wall Street or City-style excess – a stance some may not appreciate.
While hardly among the frontrunners, several other cities are also seeking a slice of the Brexit cake. Madrid’s #ThinkMadrid campaign – based on affordable housing, a relatively cheap, well-qualified workforce, lenient labour laws and plentiful sunshine – aims to attract some of London’s back-office functions.
The Spanish capital claims it has more vacant office space than any other major European city except Paris – plus a mere 58 days of rain a year, compared with 111 in Frankfurt, 129 in Dublin, 164 in Paris and 185 in Amsterdam.
In Italy, Milan is also making a pitch, particularly for technology and financial firms, with ambitious if probably unrealistic plans to turn the Expo 2015 space into a global tech hub.
Small, user-friendly Valletta, in Malta, fancies some insurance business, while Lithuania’s Vilnius and Riga in Latvia, want a share of fintech and support activities. “We have the talent and we have the infrastructure,” said Latvia’s finance minister, Dana Reizniece-Ozola. “Everyone wants to put themselves on the map.”
In reality, of course, most industry observers expect no single European city to hit the jackpot. Instead, if the UK finds itself outside the single market and without a special deal, financial services firms with major City operations will move some jobs and selected activities to a range of EU locations. Everyone could be a winner.
By Craig Fitzpatrick
25 February 2017
Morgan Stanley is considering moving 300 of its UK jobs to Dublin, as it sizes up office space in cities that could serve as EU hubs after Brexit takes effect.
Bloomberg reports that Frankfurt is the other leading candidate for the banking jobs. The timeframe for a move is unknown
The New York-based investment giant currently employs roughly 6,000 people in Britain. Morgan Stanley spokesman Hugh Fraser said:
“Our focus is on ensuring that we can continue to service our clients whatever the outcome.
“Our strong franchise and material presence in Europe gives us many options, and we will adapt as the details of Brexit become clear. Given all of this, no decisions have yet been made.”
It was one of the first financial institutions to make their Brexit fears public, announcing before the ‘Leave’ vote was even cast that a move across the Irish Sea could be on the cards.
On the day of the referendum, Morgan Stanley president Colm Kelleher told Bloomberg Television:
“This will be the most consequential thing post-war we’ve ever seen.
“Initially, the fallout can be controlled, but the political ramifications are actually quite profound.
“We’re hoping the British voter will show sense and listen to the economic arguments and stay. But we clearly are looking at our plans.”
Earlier this week, Barclays confirmed that Dublin, Frankfurt and Milan were in the running to secure the centuries-old London bank’s European headquarters, with chief executive Jes Staley telling the BBC that it “may add some people in Dublin” if – or more accurately, when – London loses single market access.
Goldman Sachs, HSBC, JPMorgan and UBS have also all signalled that they will relocate some of their operations away from London.
Sky News
By John-Paul Ford Rojas
24 February 2017
A key member of Germany’s central bank has warned UK-based lenders not to dream up clever tactics to get round restrictions to EU access after Brexit.
Andreas Dombret, a Bundesbank board member, said UK-based banks would probably have to move some operations to the European Union to preserve market access.
He said that strategies designed to avoid moving operations such as “letterbox companies”, “fly and drive” banking and “dual hatting” would not be tolerated.
“The prospects for EU market access through the UK look rather dim,” he said.
Mr Dombret’s remarks come a day after the head of Barclays told Sky News that London would remain Europe’s pre-eminent financial centre even after Britain leaves the EU.
Banks based in the capital look likely to lose “passporting” rights, which enable them to sell services freely across Europe.
Mr Dombret said they should not put great hope in “equivalence” – where the EU recognises that an outside country’s regulations are as tough, so allowing some access to firms from there – or a free trade agreement, which could prove difficult to reach.
He said: “I expect London to remain an eminent global financial centre.
“Nevertheless, I also expect a number of UK-based market participants to move at least some business units in order to hedge against all possible outcomes of the negotiations.
“We will not accept any empty shells or ‘letterbox companies’ where the business effectively continues to be done out of London.
“I urge banks not to spend their time inventing strategies to circumvent these requirements.
“This includes seemingly creative solutions such as ‘fly and drive’ banking, where bankers fly in daily from London, or ‘dual hatting’, where transactions are booked on the EU subsidiary but in fact executed in London.”
The remarks come days after HSBC confirmed it may have to move 1,000 roles from London to Paris over the next couple of years depending on the outcome of Brexit negotiations.
Swiss bank UBS also recently warned that around 1,000 of its employees in the capital would be affected by the loss of passporting.
On Thursday, Barclays chief executive Jes Staley said that London would remain the principal financial market for Europe.
However, he admitted that the bank might have to make some “tactical shifts” depending on the nature of Brexit.
Mr Staley said Barclays – which has already has staff in rival cities such as Paris, Frankfurt and Milan – said it did not expect any of the staffing changes it makes to be to the detriment of the UK.
By Giulia Paravicini and Carmen Paun
23 February 2017
Where there are drugs, there’s money.
That makes the London-based European Medicines Agency one of the biggest spoils of Brexit. And nearly every other country in the EU is actively courting the EU’s drug regulator to move to their shores once the U.K. leaves the bloc.
Untangling the U.K. from the EU is expected to drag on for years, but the new host of the EMA could be declared as early as June. The Commission already has a draft set of criteria obtained by POLITICO that encompass everything from how smooth a transition would be — since Brussels wants to keep the regulator on its drug-approval schedule — to access to hotels, airports, schools, child care and high-quality health care.
Though the health of 500 million Europeans is at stake, the bidding war is likely to be anything but orderly or even focused on public health needs.
It’s expected to come down to political considerations, regional sensitivities and even the interplay of other topics that end up on the agenda of the European Council meeting where the decision will be made — like the burden of refugee flows, for example — according to officials from member countries, the EMA and the Commission interviewed for this article.
“In the end, it will turn into a souk,” said a senior Commission official with knowledge of the issue, invoking the image of bargaining at a bustling Middle Eastern bazaar.
Lobbying to win the agency is already at the highest diplomatic levels, with heads of governments, health ministers and diplomats in Brussels and in the capitals making their public and private cases. In recent weeks, Italian Prime Minister Paolo Gentiloni pitched Milan’s candidacy directly to European Council President Donald Tusk. Croatian Prime Minister Andrej Plenković wrote to Tusk and Commission President Jean-Claude Juncker to make the case for his country, according to the local media. Others, including the health ministers of Ireland and Hungary, have pressed Vytenis Andriukaitis, European commissioner for health and food safety, as well.
“These decisions are political, absolutely, they’re made in the European Council,” acknowledged Ireland’s Health Minister Simon Harris, speaking to reporters during a recent trip to Brussels to lobby for the EMA. “But it is important, I believe as a European health minister, that criteria is set down, because this is a very important agency, and if the agency was to be located in the wrong place, then its work would go backwards.”
There is also hope, however distant, to keep the agency in the U.K., too: No law explicitly states the agency can’t sit outside the union and London has a solid case. If the risk to public health through a mass exodus of EMA staff — causing severe delays in pipeline drug approvals and stalling major projects like building the anti-counterfeit tracing system — is so great, the concerns could sway EU leaders to keep the regulator right where it is.
For the U.K. to win the hearts and minds of EU leaders, many of whom have called for a deal that punishes Britain for giving up on the EU project, the U.K. will have to show some humility — and some cash.
“Politically it would be quite hard to do,” said Mike Galsworthy, research associate at University College London and co-founder of the campaign group Scientists for EU. “EU leaders will question, ‘Why should Britain benefit from Brexit when it’s giving up on the EU?’”
Big prize
The EMA is no small prize.
Its crucial role in assessing the safety and efficacy of new drugs puts it at the center of the European pharmaceutical market. In 2016, the agency gave the green light to 81 medicines for treating cancer, cardiovascular diseases and infections, among others. To do this, the EMA brings 40,000 people each year to its 6-floor, 23,500-square-meter headquarters in London’s Canary Wharf. It needs 350 hotel rooms per night, five days a week, the agency’s Executive Director Guido Rasi said last year. The EMA has a budget of €322 million for 2017.
So the list of volunteers to adopt this economic powerhouse keeps growing. More than a dozen cities, including Milan, Copenhagen, Dublin, Lille, Stockholm and Warsaw are in the race.
Officials in Brussels say that from a purely practical perspective, Sweden, Denmark, the Netherlands and Germany have the strongest cases. They have large enough facilities to hold 900 EMA employees, plus the necessary infrastructure for housing and transportation. They offer a high enough quality of life to woo those specialists, who may be reluctant to leave cosmopolitan London.
Some EU officials may want to avoid past mistakes of meting out EU agencies to cities that couldn’t support them. But with the imperative to evenly distribute institutions — and reward the EU’s most enthusiastic members amid resurgent skepticism — all the same temptations are still there.
Only considering convenience, however, puts the EU in a political bind.
Longstanding tensions among member states — East vs West, rich vs poor, isolated vs well-connected — will frame the debate about the EMA’s home.
The frontrunners
Among the 16 countries that have joined the race, Denmark, Ireland, Italy and Sweden have the most advanced candidacies. The four countries have launched their campaigns in Brussels with task forces, websites or even an appointed special envoy dedicated to snagging the agency. All have a recurring argument in their bid: They want to minimize the impact of staff relocation and the unavoidable loss of expertise that will come with it.
Sweden claims it has one of Europe’s top national medicines’ agencies, a great record on innovation and high quality of life. It also has experience hosting a European agency because Stockholm is home to the European Centre for Disease Prevention and Control.
“We see quite an important synergy by having both located geographically at the same place. They both deal with antimicrobial resistance and these are issues that will grow in importance with time,” said Christer Asp, a former Swedish ambassador who is now coordinating the Swedish health ministry task force on the EMA.
Denmark’s selling points are that its capital is “well-connected and easy to reach,” thanks to the Copenhagen airport, and, like Sweden, the Danes list their experience in hosting international organizations, including several United Nations bodies.
Ireland and Italy have slightly different pitches. The former argues that the country will suffer the most from Brexit, and getting the EMA would serve as a sort of compensation. During a recent visit to Brussels to promote the country’s candidacy, Ireland’s Harris also pointed to Dublin’s status as an anglophone city that’s physically and culturally close to London.
Italy, which already houses the European Food Safety Authority in Parma, came up with a new concept, saying cooperation between the two agencies would benefit patients and boost expertise.
“EFSA and EMA work already together for several issues and we believe in a ‘one-health approach’ which would mean a synergistic cooperation between the two agencies,” said Giovanni Pugliese, Italy’s ambassador for Coreper I.
However, some member states say an argument like that should be disqualifying. The EU leadership needs to show it is ready to move some of the bloc’s center of gravity towards the East if it is to remain united, according to one national diplomat in Brussels. “Countries which already host EU agencies should have not even gotten in the race,” the diplomat added.
By moving early, countries hope to shape the rules of the contest in their favor.
Deciding by June could be critical. Morale at the EMA has plummeted since Brexit and is getting “worse and worse,” according to its boss, Rasi. The agency has lost an unprecedented number of high-level staff, with six senior executives quitting since the June Brexit referendum, he said. That’s more than the number who left in the last decade.
The majority of EMA employees come from overseas; only 7 percent are U.K. citizens. However, the agency’s move is expected to upend their families’ lives and cause disruption, since many likely want to stay in London.
Making a decision fast about the new seat of the agency will help end the uncertainty for the EMA employees, according to Sweden’s Asp. Once that decision is made, he estimated the relocation would take up to two years to complete.
History repeating
An EU document from 2010 says that “the decision on the seat of an agency is currently a political one for which no detailed justification is provided.”
It goes on to explain that the EU heads of states and government decided in December 2003 to give priority to new EU member countries when distributing future agencies. The countries that don’t already host an EU office should go to the front of the line, according to the document.
That’s music to the ears of Eastern countries including Croatia, Hungary and even Bulgaria, who have also joined the race, some more formally than others.
“We don’t know that much about the decision-making process,” Sweden’s Asp said. “What we are pushing very hard for, now, is a list of very clear and comprehensive criteria that should be fulfilled by the host country, and the decision-making process will start by the member states agreeing on such criteria,” he said.
The Commission is writing a checklist of ideal qualities of the next EMA that will land on the desks of Michel Barnier’s Brexit task force and Tusk. Here’s what’s not in the draft copy obtained by POLITICO: the quality of the city’s existing community of local scientists, whether the EMA should go to a member country that does not already have an EU agency, or other issues likely to be part of the political debate. The criteria focus exclusively on infrastructure and quality of life.
In any case, this checklist is likely to be ignored, officials in member states and the Commission privately acknowledge. At the same time, the Commission has learned the hard way about the pitfalls of dropping agencies into unprepared cities.
“What is sure is that they will not want to repeat the mistake of [the European Food Safety Authority] in Parma, where [former Italian Prime Minister Silvio] Berlusconi managed to get the agency claiming the Finns had no clue about prosciutto crudo and Parmesan,” the senior Commission official said.
The local cuisine is tasty, but it’s difficult to connect with the rest of the world or bring in experts: There’s only one flight a week — to Sicily.
For the EMA, good connections to other EU cities and a top-quality airport will be among the priorities, the official added.
Another example of what not to do when allocating an EU agency is the European Union Agency for Network and Information Security (ENISA) which was set up in 2004, in Heraklion, Crete’s largest city. Because of its remote location, a second office had to be opened in Athens, turning it into one of the most expensive agencies in the EU.
“Experience shows that agencies located in very remote places face severe difficulties to attract and retain staff from the rest of Europe,” the 2010 EU document said.
EU Observer
By Aleksandra Eriksson
22 February 2017
The London-based European Medicine Agency (EMA) will need a new home after Brexit, and almost a dozen European cities are already vying over the regulatory gem.
Today, almost all new or innovative medicines are submitted to EMA for assessment, which evaluates whether they are safe to put on the EU market. The agency comes with almost 900 expert workers, paid for by the EU; comprehensive research networks; and a €300 million a year budget.
Acting as a host for EMA is a boon for a country’s life science sector, but also benefits the hospitality sector: some 400 people fly in to the agency each day.
Amsterdam, Athens, Barcelona, Copenhagen, Dublin, Lisbon, Milan and Stockholm have already declared willing to be the next host of the EMA, but more candidates are mulling their bids. Sources say that at least 20 member states are considering throwing their hat into the ring.
As many things related to Brexit, the race will be uncharted waters. There is no fixed procedure for how to elect the next headquarters; the new seat must only be chosen by unanimity in the Council, where EU member states are represented, which doesn’t make the task easier.
“We are expecting the process to get mired in basic, competitive instincts,” said one EU diplomat working on her country’s EMA bid.
So far, cities are entering the contest as a beauty pageant, touting themselves as pro-European, cosmopolitan, with good food, and better weather than London. All also stress their vibrant pharmaceuticals industries.
Amsterdam puffs up its “outstanding international connections”.
Italy, a founding member of the EU, argues it’s not hosting any important European institution other than the European Food Safety Authority (Efsa).
Sweden, whose national medicine agency is one of EMA’s closest partners, has put the diplomat Christer Asp in charge of a special secretariat at the ministry of social affairs, to better prepare its candidacy.
Denmark has already identified a plot of land on which the new agency could be built. Last week, it sent its newly appointed EMA envoy – Lars Rebien Sorensen, a former CEO of Novo Nordisk – to Brussels for meeting with EU officials and patient organisations by ways of rallying them behind Copenhagen’s bid.
“It’s very important that the process is clearly defined, and that it doesn’t drag on as part of a bigger deal that wouldn’t make justice to the importance of EMA,” Sorensen told this website.
Guiding criteria
Some countries are therefore pushing the European Commission to prepare clear criteria that would guide the process and allow to elect a winner as soon as possible.
They fear that prolonged uncertainty about EMA’s future location could drive its highly skilled staff to look for jobs elsewhere.
“It goes without saying that EMA needs clarity about its future as soon as possible,” said Bert Koenders, the Dutch foreign minister, when presenting Amsterdam’s bid earlier this month. “Its work is too important to everyone in Europe to postpone the matter until after the Brexit negotiations.”
The scoreboard could include: strong links between EMA and the country’s national medicine agency; a building for 900 people; available housing for EMA staff; high level of healthcare and schooling for expat children; hotels for visitors; and good travel connections.
“It would be helpful if Michel Barnier [the EU Brexit negotiator], presented these criteria as soon as possible,” one EU diplomat said, suggesting it could happen at the first Council meeting after Britain has triggered article 50, officially launching its exit negotiations.
Brexit will meanwhile mean that pharmaceutical companies need to apply for a separate permit to market medicine in the UK, which could entail that pharmaceuticals are introduced to the UK market at a delay.
27 February 2017
The 29bn euro (£24.5bn) merger of the London Stock Exchange and Deutsche Boerse could collapse after the LSE said the deal was unlikely to be approved by the European Commission.
The commission had ordered the LSE to sell its 60% stake in MTS, a fixed-income trading platform.
However, the LSE said the request was “disproportionate”.
It warned investors it would struggle to sell MTS and that such a sale would harm its ongoing business.
As a result, the LSE said: “Based on the commission’s current position, LSE believes that the commission is unlikely to provide clearance for the merger.”
The two rival exchanges announced plans for a “merger of equals” about a year ago, aiming to create a giant trading powerhouse that would better compete against US rivals.
They had already agreed to sell part of LSE’s clearing business, LCH, to satisfy competition concerns before the commission’s surprise demand concerning MTS earlier this month.
The Commission had given the exchanges until Monday to come up with a proposal to meet that demand.
LSE said that such a sale would need regulatory approval from several European governments and would hurt its wider Italian business.
“Taking all relevant factors into account, and acting in the best interests of shareholders, the LSE Board today concluded that it could not commit to the divestment of MTS,” the exchange said on Sunday night.
‘Good news’
MTS is a relatively small part of LSE’s business, but it is a major platform for trading European government bonds, particularly in Italy, where it is classified as a “systemically important regulated business”.
The LSE group also owns the Milan-based Borsa Italiana.
The LSE said it remained convinced about the merits of a merger, but joining forces with Deutsche Boerse would be impossible unless the commission changed its stance.
Deutsche Boerse said on Sunday night that it and the LSE would await a further assessment by the European Commission, which was expected to make a decision by the end of March.
Syed Kamall, MEP for London and a member of the European Parliament’s financial services committee, told the BBC: “I think this is good news for competition, and it’s also good news for those who are worried that some business in London might be moved to Frankfurt via the back door.”
The European Commission declined to comment.
Shares in the London Stock Exchange fell 3% on the news.
Europe and Brexit:
Business Insider
By Ben Moshinky
22 February 2017
US investment bank Citigroup is considering Frankfurt as a new European base for its markets and trading arm as part of its Brexit plan
Jim Cowles, Citigroup’s European chief, said “Germany is one of our favourites” as a location for the bank’s European base in an interview with German newspaper Frankfurter Allgemeine Zeitung published on Wednesday.
Citigroup has 370 people in Frankfurt and could shift 200 more to Germany’s financial centre from London to maintain access to the European single market after the UK leaves the European Union.
In January, UK Prime Minister Theresa May her Brexit plan in a speech signalling that Britain would leave the single market, which is a free trade bloc of European countries, in return for tougher immigration controls on EU citizens.
Financial firms in London will lose their ability to passport in to continental European clients from their UK base. Cowles said “it is the worst case and I think we have to adapt to it,” in the interview with FAZ.
Cowles said that Citi was attracted by the “professionalism” the German regulator BaFin and would make a final decision by the middle of the year.
In January Cowles said “our issue is with our broker-dealer which is located in the UK and it will lose, presumably, passporting rights,” at a banking conference in Ireland.
“We’ve reached out, we’ve talked to regulators and people at government across many countries in Europe, including Ireland, Italy, Spain, France, Germany and the Netherlands and we’re in the process of evaluating each one of them,” Cowles said.
Broker-dealers handle trades on behalf of clients such as funds or companies.
In the days after May’s speech signalling her desire for a so-called hard Brexit, HSBC, JPMorgan, and UBS have all warned about job relocations.
Jamie Dimon, CEO of JPMorgan Chase, told Bloomberg at Davos that the bank will likely move more people than previously thought. “It looks like there will be more job movement than we hoped for,” Dimon said. The bank employs 16,000 people in the UK.
City A.M.
By Jasper Jolly
22 February 2017
Dragging euro clearing out of London after Brexit could pose a risk to global financial stability and push up transaction costs, according to a deputy governor of the Bank of England (BoE).
Sir Jon Cunliffe, who supervises financial stability for the Bank, hit out at “currency nationalism” as policymakers wrangle over the fate of euro clearing when the UK leaves the EU.
Cunliffe said: “A policy of ‘currency nationalism’ is not a necessary condition for either financial or indeed monetary stability.”
He added: “Such a policy if applied by all jurisdictions is in the end likely to be a road to the splintering of this global infrastructure – and to further fragmentation of the global capital market – rather than the route to the sound and efficient management of risk.”
The European Central Bank (ECB) has long been keen for euro clearing, in which transactions are made via an intermediary to make them smoother, to be moved to the Eurozone.
The ECB lost a court challenge to previous efforts to require the movement of clearing, but after the UK leaves the EU the European Parliament would be free to change the law without fear of a British veto.
The bulk of euro clearing currently takes place in the UK’s three major clearing houses, with around €1 trillion (£845bn) of euro trades every day, according to European think tank Bruegel. 83,000 City jobs could be lost if the move takes place, according to a report by EY.
Read more: No transition deal for clearing will hurt the other EU member states
Euro clearing has become even more politicised since the UK’s June vote to leave the EU. After the vote French President Francois Hollande said the loss of clearing would serve as a “lesson” for the UK.
The increasingly political rhetoric around clearing was “surprising”, Cunliffe said, as the multi-currency capability of firms such as London-based LCH “reduces the costs of central clearing – costs that are ultimately borne by the real economy.”
This analysis was borne out by a report by Intercontinental Exchange (ICE) which pointed to a “significant increase” in costs for European banks if Brussels gets its way.
Ratings agency S&P also reported a move of clearing to the Eurozone would be “unparalleled among major global markets.”
However, others, including the vice chairman of BlackRock, Philipp Hildebrand, say the UK will lose its clearing crown.
By Ben Chapman
22 February 2017
Paris has ramped up efforts to lure jobs from London as Europe’s leading business hub post-Brexit after announcing a huge investment in its main business district, La Défense.
The French capital hasn’t constructed any buildings that are taller than 100m for more than 40 years, but in a bid to attract financial firms it will now build seven new skyscrapers in La Défense by 2021.
The towers will create 375,000 sq m of new office space as well as new restaurants and co-working areas, Defacto, the organisation which is promoting the development, said on Wednesday.
Marie-Célie Guillaume, chief executive of Defacto, said, “Brexit represents a huge opportunity for Paris.
“With only a few weeks to go until Article 50 is triggered, we want to send a powerful message to businesses that are uncertain about their future in London,” Ms Guillaume said.
The infrastructure announcement follows an aggressive campaign by Defacto, urging UK businesses to “join the frogs”. Paris has been particularly keen to attract London’s financial firms, which fear the consequences of losing their passporting rights to trade freely across the EU.
On Tuesday Emmanuel Macron, a candidate in May’s French presidential election, said he wants British “banks, talents, researchers, academics” to move to France after Brexit.
He said if elected his policies would include “a series of initiatives to get talented people in research and lots of fields working [in London] to come to France”.
A host of financial firms have announced plans to move jobs out of London in recent months. HSBC already has an office in La Défense and said in January it would move around 1,000 jobs from London. UBS said around the same amount would go while JPMorgan chief executive Jamie Dimon warned that more than 4,000 of its staff could be relocated from the UK.
Speaking at the World Economic Forum in Davos in January Goldman Sachs boss Lloyd Blankfein said New York had already gained from Britain’s decision to leave the EU and that his bank had stalled previous plans to move jobs to London.
Independent Ireland
By Colm Kelpie
24 February 2017
A European Commissioner has said London will continue to be important in terms of financial services after Brexit, but that Frankfurt and Paris will also take on enhanced roles.
Valdis Dombrovskis, Commissioner for the Euro and Social Dialogue, was reportedly asked which city would be Europe’s financial capital in 2022.
“I can imagine that London will still play an important role,” he said. But he added that Frankfurt and Paris would take on a greater role, according to news service Bloomberg, with no mention of Dublin.
Dublin has been tipped as a possible contender to attract financial services jobs displaced as a result of the Brexit vote, vying with other European capitals including Frankfurt, Paris, Amsterdam and Luxembourg.
The Central Bank – which accepts licence applications from firms looking to establish here – said it was ready to engage with new business looking to shift operations to Ireland.
It comes as Morgan Stanley is said to be scouting for office space in Frankfurt and Dublin for an enlarged European Union hub following the UK’s vote to leave.
The bank may initially move about 300 workers to one of the cities, Bloomberg reported.
“Our focus is on ensuring that we can continue to service our clients whatever the Brexit outcome,” Hugh Fraser, a spokesman for Morgan Stanley, said by e-mail. “Our strong franchise and material presence in Europe gives us many options, and we will adapt as the details of Brexit become clear. Given all of this, no decisions have yet been made.”
Global banks in London may have to shift €1.8 trillion of assets elsewhere after Brexit is completed, putting as many as 30,000 UK jobs at risk, according to Brussels-based research group Bruegel.
Competition has been growing among certain EU capitals looking to lure firms from London following the referendum result. The French government pledged within days of the Brexit result to make its tax regime for expatriates among the most favourable in Europe.
In November, Finance Minister Michael Noonan said the process for banks to establish here and get a licence could take at least a year.
The Guardian
By Dan Roberts and Jill Treanor
21 February 2017
The City of London has warned that the loss of banking jobs to EU countries due to Brexit could threaten British and European financial stability.
Interviews with more than half a dozen senior bankers and business leaders reveal growing certainty that the threat of losing single market access will force a wave of relocations this year and may cause an “unwinding” of a cluster of related businesses.
While the immediate loss of a few thousand jobs is viewed with relative equanimity, concern is mounting over the knock-on effect on financial stability if the City’s valuable related professions begin to fragment.
Douglas Flint, the chairman of HSBC, Britain’s biggest bank, said common regulation needed to be agreed with the remaining 27 EU members once Brexit talks got under way or there was a risk of sparking turbulence in the financial system.
“One of the critical pieces is the ecosystem that exists, which effectively connects the fund managers to the risk managers to the liquidity providers to the insurance providers and the credit providers … it all benefits from all the other pieces being there,” Flint said.
“That gets built up over decades as bits get added to the existing cluster. It’s difficult to know which is the piece that causes people to say, ‘Well, if that’s not there I have to do something else,’ and you get an unwinding of a cluster because things that are connected today are more important than people imagine.”
He echoed that warning in remarks accompanying HSBC’s worse-than-expected results yesterday, pointing to “uncertainties facing the UK and the EU as they enter Brexit negotiations”.
HSBC will implement its contingency plan – to move 1,000 roles from London to Paris – “progressively over the next two years” but American, Swiss and Japanese investment banks may not have as much time because of the way they are structured. Many rely on their operations in London to service their EU clients and are preparing to open replacement offices and apply to local regulators for new banking licences to ensure they can keep providing finance to major clients after the UK leaves the single market.
All firms need to make some adaptations to the way they operate, regardless of the length of any transition period, but City sources said the extent to which business leaves the UK will depend on what deal Theresa May’s government strikes.
Flint said there was recognition of a need for a transition period. “If one of the ways of avoiding damage is ensuring a proper implementation phase that must be in everyone’s interest” .
“The point of no return is probably nine to 12 months away,” said one senior investment banker in London. “The only thing we might know by then is whether an implementation phase is possible, but I am very sceptical they can deliver on it [in time], so we will go past the point of no return.”
A report by accountants PricewaterhouseCoopers for a pan-European lobby group has warned that some banks cannot wait for long. It says: “Clarity will only emerge on the negotiation outcomes during the negotiation period following article 50 notification, with certainty only at its conclusion, so these banks need to begin implementation before having certainty over the eventual Brexit outcome.”
Such warnings are being passed to the government by a number of top financiers, many of whom believe the City’s early focus on job losses has obscured the more important challenge of persuading Europe that it faces potentially catastrophic risks of its own if London’s position as a financial centre is damaged.
“The big question of what being outside the single market [for financial regulation] actually means is still unresolved,” said Sir Howard Davies, the chairman of Royal Bank of Scotland and a former deputy governor of the Bank of England. “How far, even if you’re outside the single market, can you retain equivalence … or are you regarded as a third country; all of that … tedious sort of detail … is still to play for.
“The extent to which we get equivalence will depend on the extent to which we can bring home the argument that not agreeing a reasonable degree of equivalence between London and the rest of the EU is actually going to be disruptive to Europe’s capital markets and damage the ability of European companies to raise funds. That’s where the current battleground is.”
Bankers predict that the talks will start badly. They worry that off-colour remarks by ministers such as Boris Johnson are causing particular offence in the EU and provoke belligerent rhetoric over the size of any “divorce settlement” – a particular cause for concern in the run-up to triggering article 50.
Davies, who spends part of his time as a professor at the Sciences Po university in Paris, said: “There clearly is a risk of a disorderly Brexit if it becomes politically very unpleasant. I’m slightly anxious about the fact that what I hear when I go over to the other side of the Channel is all they are focusing on is the size of the [settlement] bill and that seems to me not particularly well understood in the debate here.
“If it becomes very acrimonious you never know how the consequences flow. People may start to make decisions which are economically irrational, and what you want is for both sides to say, ‘Look, we can have our rhetoric but what really makes sense for both sides?’ My fear is irrationality, and irrationality generated by a mismatch of expectations, when the process starts.”
Though most business leaders have welcomed May’s recent speech promising to try to secure a generous free trade agreement with the EU, many remain sceptical that it can be achieved in the face of such rancour and competing interests.
Instead, they fear a “crash landing” that leaves only World Trade Organisation rules in place.
In an interview shortly before May’s speech, Carolyn Fairbairn, the director general of the CBI, urged: “We have been absolutely clear and I remain absolutely clear that an exit into WTO [rules] at the stroke of midnight without the proper planning and preparation in place would be very serious for the UK economy. We think an abrupt overnight move into WTO [rules] should be ruled out. It is not an ideological argument, it is a practical one.”
“When the prime minister starts to say ‘no deal is better than a bad deal’ that is deeply worrying,” said one investment banker.
The Guardian
By Daniel Boffey
25 February 2017
An exodus of “fintech” companies from Britain has begun, the chief executive of a leading firm has said, dashing the government’s hopes of building the UK into a world leader for the industry.
Every reasonably-sized company in the flourishing financial technology sector – involving e-lending, money transfers and the banking markets – is now actively looking at moving staff and investment out of the country because of the uncertainty caused by Brexit, it is claimed.
Simon Black, chief executive of PPRO Group, reputedly one of the fastest-growing fintech businesses in Europe, said his firm was now starting an operation in Luxembourg because of question marks over whether UK-based companies would still be able to trade in the rest of the EU under current “passport” rules which are granted to all member states.
“I don’t know of a licensed fintech company in the UK that isn’t looking at options,” he said. “Everyone is thinking about it and anyone that is any size, that is employing more than 10 people, is active. The exodus is beginning. It will be more visible in 2018.”
The UK has been a pioneer of the fintech revolution, which employs 60,000 here and has won government initiatives to help investment. The sector earned £6.6bn in 2015, and the then chancellor George Osborne said he wanted London to become “the global centre for fintech”.
Black said the industry could not wait for the outcome of Brexit negotiations, so investment that could have been made in the UK was being diverted overseas. “We have to plan for the scenarios when passporting ends, and that means we have to get a licence in another EU country.”
“The reason we can’t wait for results from the negotiation is that the full application process can take, in some countries, from six months right up to 18 months, and maybe longer. Then you need to recruit locally, you need specialists in compliance. It is a really big undertaking.”
Last week the French centrist presidential candidate Emmanuel Macron said he would take a tough line in Brexit negotiations if elected to lead France, raising fresh concerns that any arrangement for the City of London will be hard-fought. Macron also called for startups and businesses to come to his country.
Black said: “I expect passporting rights will be one of the last things that gets sorted in the negotiations. After listening to Macron, I think the EU guys are going to hold on to that bargaining chip. There are incredibly envious eyes being cast towards our financial services industry. We can’t wait. That’s the point, and there are many other companies like us.”
Black said he looked at settling in Ireland, the Netherlands, Belgium and the Czech Republic before opting for Luxembourg, where he has already recruited a managing director. Startup costs alone, including the application for regulatory approval on the continent, would cost €1m of his €31m turnover, he estimated.
He said: “Most of that money would have gone into the UK. We have 20 people in London, and that has grown rapidly. Without Brexit I would have been very confident that within five years it would be 200 people in London. Now it would be more like 40 to 50, and most of the difference will go into Luxembourg.“I know of a couple of companies that have shelved their international expansion. I know one big US investment bank, someone I spoke to at a conference last week, and he said their plans are much more advanced than has been picked up on by the press.
Liberal Democrat Treasury spokesman Susan Kramer said: “George Osborne promised to make London the centre for fintech but under this Conservative Brexit government it will only be job centres that see any dramatic growth.
“Ministers are in complete denial about the scale of the exodus. Independent estimates say a hard Brexit will cost the UK up to £200bn over the next 15 years.
“Germany has overtaken us as the fastest growing economy in Europe, and the EU is now out-performing the US. Yet Theresa May wants to surgically remove us from the European Single Market. And to think that the Conservatives used to be the party of business.”
By Pascale Braun
26 February 2017
Plenty of people have reason to bemoan Britain’s retreat from the European Union. But for others, Brexit could spell opportunity. And perhaps nowhere is that truer than in Luxembourg, with its booming financial center focused on investment funds management services and financial technology, or FinTech, as it’s sometimes called.
The Brexit effect may, in fact, have already begun for the tiny Grand Duchy. In January, Japan’s Rakuten Europe Bank launched its trading activities in Luxembourg. Two Chinese banks — China Everbright Bank and the Shanghai Pudong Development Bank — also have plans to set up shop in this nerve center of asset management in the EU. And in October, Britain’s M&G Investments applied with the CSSF, the financial sector supervisor, for permission to start a fund distribution firm there.
This isn’t to say that companies are stampeding their way into Luxembourg. But there does seem to be renewed international interest in the country as a financial center.
How exactly the Brexit plays out is still very much an open question. But the shifting status of London vis-à-vis the EU will no doubt push some companies toward the continent. Dozens of banks are thought to have already applied for their EU “work permits” with CSSF. And of all the possible landing sites, Luxembourg “is particularly well placed to offer practical solutions,” says Tom Théobald, a deputy-head of Luxembourg for Finance (LFF), a public-private agency that develops Luxembourg’s financial sector.
“London will keep its status as an international financial center,” he adds. “But it will have to learn to work like the Swiss banks, with national seats and management platforms beyond its borders.”
Enviable assets
Authorities and business leaders in Luxembourg were as shocked as anyone by the Brexit vote. But they were careful to say little in public that might upset its relations with London, Europe’s top financial center. The City of London remains Luxembourg’s first partner in fund transfers in both directions, while the Grand Duchy manages some 600 billion euros worth of British funds.
Since Brexit, however, Luxembourg’s finance minister, Pierre Gramegna, has become an unabashed promoter of his country’s financial sector, repeating in London, the United States and China that Luxembourg would be the “natural choice” for financial actors looking for an EU operations base.
The sales pitch relies on some undeniable advantages. From the 1970s, Luxembourg began replacing steel as its big industry with finance, with an international outlook right from the start. It helps that its 549,000 citizens are taught French, German and English from early school age.
Unable to rely solely on the domestic market, Luxembourg’s banks began specializing in logistical or back-office tasks for foreign, private and public investment firms, and in insurance and asset pricing.
This was the first European state in the late 1970s to host Islamic and then Chinese banks, and listed sukuks, or Sharia-compliant bonds, in 2002. It is established today as a financial bridge between the EU and China, being a member of the Asia Infrastructure Investment Bank, hosting China’s top six banks and handling 69% of the country’s investment funds in Europe.
Cited constantly in illegal financing and tax evasion scandals like Clearstream, the Panama Papers or LuxLeaks, the country has revised legislation to curb excessive tax maneuvering by firms that can harm its credibility as a financial center. And yet its lenient tax regime (its current corporate tax rate of 29.5% is set to fall to 26.5% by 2018) and a concentrated supply of skills is already attracting giants of online trading like Amazon Payments, Paypal and eBay.
Luxembourg has also lured startups like Bistamps and Ripple, which handle real-time payments for Bitcoin. The Grand Duchy was the first EU state, in fact, to authorize Bitcoin. The country’s banks are also pioneers of creating “green” debt instruments to finance sustainable investments.
Fostering FinTech
The country is “accessible, open and multicultural,” says Nasir Zubairi, a former financier who in November became CEO of the Luxembourg House of Financial Technology (LHoFT), a FinTech platform set to open a startup incubator in Luxembourg City this year.
A big symbol of the changes here is the Belval site near the French border, where former blast furnaces have been converted into a large innovation hub attracting researchers, students and business people from across the world. Some 30 startups backed by the Technoport incubator can access the resources of the massive, 18-floor Maison du Savoir, which Luxembourg University opened in Belval in 2014. Proximity provides those working here with direct access to French and German markets.
The United Kingdom has its own start-up accelerator under the aegis of the Bank of England, and has created regulations to favor FinTech. Brexit can either hamper its initiatives, or boost them by forcing the UK to integrate further into the European digital market. Brexit does not rule that out.
Luxembourg wants to strengthen its complementary role here, and “must continue to collaborate with the United Kingdom while sustaining FinTech activities in Europe,” says David Diné, media relations project manager at the firm PwC Luxembourg. Brexit’s threat to Luxembourg would be if Britain were to become a tax haven, a possibility cited recently in comments made by the chancellor of the exchequer, Philip Hammond.
Luxembourg reluctantly submitted to fiscal transparency rules in 2014, and would not like to see competition from the City in the realm of fund management, as that would be too strong. Luxembourg may be one of the world’s safest place, but it still lacks London’s financial clout and cachet.
Former French president Jacques Chirac, it’s worth recalling, used to compare the tiny country to a French district or province. And yet that hasn’t necessarily been a bad thing. Luxembourg’s low profile, it turns out, has paid off quite nicely.
Independent Ireland
By Ronald Quinlan
26 February 2017
Ireland’s financial services industry is set to absorb in the region of 13,000 jobs from the UK arising following its decision to vote in favour of Brexit.
That’s according to an analysis carried out by John Ring of Knight Frank as part of the agency’s Dublin Office Market Review and Outlook for 2017.
Using statistics gleaned from a range of sources, including the European Parliament, the British Banking Authority and the Brussels-based ‘think tank’, Bruegel, Ring has estimated Ireland will gain up to 15pc of the employment leakage arising from Brexit.
While the British Banking Authority states that 25pc or 262,500 of the UK’s financial services 1.05m strong workforce is engaged in wholesale banking, Bruegel believes that only one third of this activity (87,499 jobs) will migrate to the EU 27 [member states].
Should that prediction be proven to be accurate, Ireland’s 15pc share of the post-Brexit spoils would amount to 13,125 additional jobs, Ring believes.
Taking those numbers, he estimates there will be a need for an additional 1.7m sq ft of office space in Dublin beyond existing annual requirements to meet the demand for office accomodation in the capital.
“Dublin stands to benefit from an additional 1.7 million sq ft worth of office demand arising from the need of financial firms to retain their EU passporting rights.
“Given that 10-year average take-up is approximately 2 million sq ft per annum, this quantum of demand, arising from financial services alone, represents a major positive demand shock,” Ring said.
“Most encouraging from a Dublin office point of view is the growing likelihood that Dublin will see significant relocations of financial firms from London with Morgan Stanley, JP Morgan, Bank of China, BNY, Lloyds, Barclays and Credit Suisse all rumoured to be eyeing Dublin as a post-Brexit base,” he added.
Financial Times
By Patrick McGee and Peter Campbell
27 February 2017
BMW is considering making an electric version of the Mini outside the UK because of the uncertainty posed by Britain’s decision to leave the EU.
The German carmaker has owned the British marque since 1994 and manufactures all but two models in the UK.
But the first battery-powered edition of the car, which is set to go on sale in 2019, may be manufactured on the continent, the company said.
BMW said a final decision would be taken this year, adding “we’ve got to make sure we have the best business case possible”.
Spokeswoman Emma Begley said: “The result of the EU referendum creates uncertainty for the automotive sector in general and for overseas investors in particular. Uncertainty is not helpful when it comes to making long-term business decisions.”
But she said BMW remained committed to the UK and that it was “business as usual” at its four manufacturing bases in the country. “It’s too early to know the outcome of the negotiations,” she added.
The possible failure to secure the production of an electric Mini in the UK, first reported in Geman newspaper Handelsblatt, would be a blow for Britain’s ambitions to become a powerhouse in the market for battery-driven cars.
Greg Clark, the UK business secretary, is seeking to position the country to become a world leader in battery development. He has offered to support electric car research as part of the government’s industrial strategy.
Nissan builds the electric Leaf car at its Sunderland plant, while Jaguar Land Rover has stated its ambition to manufacture electric vehicles in the UK.
Mr Clark this month met PSA executives to promote the idea of making electric Opel and Vauxhall cars in Britain if the French carmaker’s pending deal to buy Opel from General Motors is successful.
As well as the Mini plant in Oxford, BMW makes engines at Hams Hall in North Warwickshire, Rolls-Royce in Goodwood and has a pressings plant in Swindon.
BMW employs about 8,000 people in the UK and it is the company’s fourth-largest market by sales. In 2015, more than 200,000 Minis were produced in the UK — 12 per cent of the country’s car production.
The group already manufactures the Mini Countryman — which accounts for a third of the brand’s sales — in Born, Netherlands, in addition to the convertible Mini.
More than 3m Minis have been made in Oxford since 2001, with more than 2m exported to 110 markets, BMW said.
About 38 per cent of Minis made at the Oxford site are sold in the EU, while 56 per cent of BMW’s British-made engines go to the EU, including many for the popular 3-series saloon, which is assembled in Germany.
Before the Brexit referendum, BMW was an outspoken advocate of the UK remaining in the EU, saying it was “extremely beneficial to British-based business” to have free movement of components, finished products and skilled workers within the bloc.
General Brexit news:
By Christopher Hope
21 February 2017
Britain will be plunged into its biggest turmoil in over a century if peers attempt to thwart Brexit, former Conservative leader Lord Hague warned as Theresa May went in person to the House of Lords to watch peers debate the law which will trigger the start of negotiations about Britain’s exit from the European Union next month.
Former Tory chancellor Lord Lawson of Blaby was jeered in the Lords as he warned against any “improper” amending of the Brexit Bill.
But former Labour Cabinet minister Lord Mandelson told peers he did not vote to stay in the bloc because of his pension rights as a former EU Commissioner but as “a patriot”.
The peers were speaking as they started a marathon two day debate over a Bill which will trigger the start of Britain’s talks about leaving the European Union by the end of next month.
Mrs May arrived in the House of Lords’ Chamber just before 3pm, and sat on the steps below the royal throne, as she is allowed to do as a member of the Privy Council.
It is thought the last time a sitting Prime Minister attended the Lords was when David Cameron went to listen to tributes to Margaret Thatcher after her death four years ago.
But attending a debate on Government legislation is unheard of.
Labour peer Baroness Royall said on Twitter: “Theresa May on the steps of the throne to listen to the beginning of the Article 50 debate. Amazing. Never known the PM to be present.”
Earlier on a visit to Stoke ahead of the by-election there later this week, Mrs May said: “[The Bill] was not amended [in the House of Commons]. I hope that the House of Lords will pay attention to that.
“Properly there will be debate and scrutiny in the House of Lords, but I don’t want to see anybody holding up up what the British people want, what the people of Stoke-on-Trent voted for last year, which is for us to deliver Brexit, to leave the European Union.”
Eurosceptic MPs accompanied the Bill after it cleared the House of Commons 10 days ago. However it is unusual for the Prime Minister to go in person to listen to peers’ debates.
The MPs will be hoping that they can be a visible reminder to the unelected peers of the will of the people after the country voted  to leave the EU.
Just over 190 peers are due to debate the Brexit Bill – 80 today and 110 tomorrow – in a sitting running late into the evening.
Peers are likely to vote on the contentious amendments such as giving EU nationals a legal right to remain in the UK after Brexit next week.
Theresa May, the Prime Minister, arrived in the House of Lords’ Chamber as the debate got underway, and sat on the steps below the royal throne, as she is allowed to do as a member of the Privy Council, next to Leader of the House of Commons David Lidington.
Later Boris Johnson, the Foreign secretary, took their place. It is the first time in living memory that a sitting Prime Minister has attended a debate on legislation in the Lords.
Baroness Evans of Bowes Park, the Leader of the House of Lords, told peers to respect the “primacy” of the House of Commons.
Lady Evans urged peers not “try and shape the terms of our exit, restrict the Government’s hand before it enters into complex negotiations or attempt to rerun the referendum”.
She said: “In May 2015 a Conservative Government was elected with a clear manifesto commitment to ‘negotiate a new settlement for Britain in the EU’, to ‘ask the British people whether they want to stay in on this basis, or leave’ and, to ‘honour the result of the referendum, whatever the outcome.’
The European Union (Notification of Withdrawal) Bill has already cleared the Commons unamended with big majorities.
But the Government does not have an in-built majority in the Lords and opposition peers are determined to try and amend the legislation during its later stages next week.
Mrs May sat watching intently, just feet away from the chamber’s red benches, as Lords leader Baroness Evans of Bowes Park said the Government had a “strong mandate” from the people and elected MPs to trigger Article 50.
Later, Lord Hague said it would be a “great mistake” for people to heed the call from former Labour Prime Minister Tony Blair for people to rise up against Brexit last week.
Lord Hague of Richmond – who as William Hague was Tory leader from 1997 to 2001 – said: “The referendum was decisive and attempts to refight the referendum which begun in the last few days are a great error.”
He said that if he had asked people to rise up against Mr Blair’s landslide victory in 2001 “he would have told me to listen to the voters and abide by the result”.
He added: “If there was a real chance of success, or rising up success against leaving the European Union, it would open up the most protracted, bitter, potentially endless conflict in British society we have seen since the decades of debate on Irish Home Rule, and possibly even longer than that. It is not in the interests of our democracy and the governance of the country to do so.”
The UK “cannot go round in circles” over Brexit, Lord Hague said, adding: “We cannot be leaving the EU in 2017, and remaining in it in 2018, and leaving it again in 2019 and by 2020 to be too confused about what we are doing.”
Later, Opposition peers shouted “shame” as Lord Lawson said amendments already tabled did not seek to amend the Bill’s provisions but would “delay” the Bill.
He warned: “In the unprecedented circumstances in which we find ourselves, I have to say that were the House to entertain any of the amendments it would have embarked on an ill-advised, improper and fundamentally unconstitutional manoeuvre.”
Lord Lawson added there was no way the EU would agree the sort of trade deal Britain was offering. For them, no deal was better than a good deal for Britain.
He told peers that failure to secure a trade deal was “no disaster” and denied the UK would fall off a “cliff edge” as trade would continue on WTO terms.
But Lord Mandelson, the former Labour trade secretary, argued claims the UK would enjoy the same trade benefits after breaking with Brussels amounted to “a fraud on the public”.
He claimed the Government had “lost its sense of perspective” on Brexit, with its priority being “assuaging the ideologues” rather than trade, investment and jobs.
He said: “As is well known, I was a Remainer. Not I might say because of my pension rights but because I am a patriot. A patriot rather than a nationalist.
“And that’s why I think the approach the Government has chosen to take to Brexit is wrong.”
Labour’s leader in the Lords Baroness Smith said her party will seek to amend the legislation but said there would be no extended wrangling between the Chambers..
This virtually guarantees UK triggering Article 50 by the end of March because dates for this Parliamentary “ping pong” have been set for March 13 and March 14.
However Lord Cashman, a Labour peer and former EastEnders actor, said he would back amendments to the Bill to protect UK access to the single market and customs union as well as the principle of freedom of movement.
He said: “It is time the UK enforced the conditionality of the principle of freedom of movement, even if that means introducing national ID cards.”
By Steven Swinford
26 February 2017
heresa May is next month poised to announce the end of free movement for new EU migrants on the same day that she formally triggers Brexit negotiations.
The Prime Minister is expected to say that EU citizens who travel to Britain after she triggers Article 50 will no longer have the automatic right to stay in the UK permanently.
They will instead be subject to migration curbs after Britain leaves the European Union, which could include a new visa regime and restricted access to benefits.
Mrs May is expected to say that EU migrants who arrived in the UK before the “cut-off date” will have their rights protected as long British citizens living elsewhere in Europe are granted the same assurance.
Iain Duncan Smith, a leading Eurosceptic conservative MP, said that that announcement will show that Mrs May is taking control of Britain’s borders while giving clarity to the 3.6million EU migrants already living in the UK.
He said: “Theresa understands that if you want to take control you have to command the high ground. She will be giving clarity by setting a clear deadline while the European Union looks increasingly muddled and mean-spirited”.
The announcement means that the “cut-off date” for EU migrants is likely to be around March 15, once the Government’s Article 50 bill has gone through Parliament.
The Prime Minister is expected to appeal to other European Union nations to reach a quick deal on the issue so it can be removed from Brexit negotiations as soon as possible.
It is likely to put her in conflict with the European Union, which has been pushing for Mrs May to delay the cut-off date until 2019. However ministers have raised concerns that waiting until the end of negotiations will lead to a huge surge in the number of EU migrants coming to the UK before Brexit.
“We have had some suggestion that that the European Commission might attempt to force us to protect everyone who arrives up to the moment of departure,” a Government source said. “We could end up with half of Romania and Bulgaria coming here if we wait that long.”
The Government has also considered suggestions that the cut-off date should be set for the referendum date in June last year. However Government lawyers have advised that such an approach would be illegal.
Amber Rudd, the Home Secretary, said that after Britain leaves the European Union “we will be ending free movement as we know it”.
She is examining plans to give new arrivals who get jobs in key sectors of the economy multi-year visas while limiting access to benefits.
Under one plan being considered migrants would be given five-year working visas but barred from claiming in-work benefits while they are in Britain.
She confirmed that the Home Office is “working on a range of options” but suggested that the final system will only be decided after “two years of negotiations and preparation”.
David Davis, the Secretary of State for Leaving the European Union, has previously suggested that Britain will not suddenly shut the door on workers coming from the EU.
He suggested that it will take “years and years” for Britain to fill all the jobs that would otherwise have been done by EU migrants.
Asked about his comments Mrs Rudd said that the Government does not want a “cliff-edge”, suggesting that migration controls could be limited initially after Brexit.
She said: “I think what he [David Davis] is highlighting is the fact that as a government we’re going to work with businesses, with employers to make sure that the immigration system we put in place does enable them to continue to thrive and continue to grow. What shape that will be we can’t say yet.
“We are against cliff edges. So as part of the consultation that we will be bringing out in the summer we will be asking them the best way to deliver that.”
While the UK has reached agreements in principle with most members of the European Union already there are still several nations, including Germany, who have refused to discuss the issue until after Brexit is triggered.
Mrs May is also facing a rebellion in the House of Lords over the issue where Tory peers are prepared to back a campaign by Labour and the Liberal Democrats to guarantee the rights of EU nationals.
It came after reports that ministers are also discussing plans to give the independent Migration Advisory Committee (MAC) an advisory role on how many visas should be issued to take the political sting out of the issue.
The committee would decide how many visas need to be issued for workers in key industries such as software engineering, health and social care, farming and hospitality, which are heavily reliant on immigrants.
The cut-off date for the 1.2million British nationals living in other EU countries will ultimately be decided by Brussels. The European Parliament’s chief negotiator has suggested that the EU will offer British people to individually opt-in and remain European citizens.
The Guardian
By Daniel Boffey
21 February 2017
Britain can expect a “very hefty” bill as the price of leaving the EU, the European commission president, Jean-Claude Juncker, has warned.
Speaking to the Belgian federal parliament, Juncker spoke of his personal sadness about Brexit but insisted that the UK would not be able to negotiate a “cut-price or zero-cost” exit.
Instead, he said, it would have to pay a high price for the commitments which it entered into while a member state, adding that Brexit was “a crisis which concerns us all”.
“We need to settle our affairs not with our hearts full of a feeling of hostility, but with the knowledge that the continent owes a lot to the UK,” he said. “Without [Winston] Churchill, we would not be here – we mustn’t forget that, but we mustn’t be naive.
“Our British friends need to know – and they know it already – that it will not be cut-price or zero cost.
Using the French slang word “salty”, meaning hefty or pricey, he added: “Therefore the bill will be – to use a rather vulgar term – very salty. It will be necessary for the British to respect commitments which they freely entered into.”
Discussions are under way in Brussels over the size of the bill to be presented to Theresa May when she launches withdrawal talks. At a meeting of EU27 member states and the commission’s chief Brexit negotiator, Michel Barnier, in Brussels last week, it was suggested that Britain was likely to be asked to pay about €57bbn (£48bn) in instalments over the next six years.
The sum is expected to cover the UK’s share of the cost of projects and programmes it signed up to as part of the 28-nation bloc, as well as pensions for all the EU officials who have served during its 45-year membership.
Juncker also reiterated the commission’s’ position that withdrawal arrangements – including an agreement on the bill, the rights of EU nationals in the UK and British nationals living on the continent and an arrangement over a potential border between Northern Ireland and the Republic – must be agreed before there can be meaningful discussions about future trade relations.
The UK government has insisted that these talks can run in parallel after May triggers negotiations under article 50.
Juncker said: “This will be a difficult negotiation, which will take two years to reach agreement on the exit arrangements. To agree on the future architecture of the relations between the UK and EU, it will need years.”
He added: “Those who want to benefit from the advantages of the single market must respect the four fundamental freedoms, including the one which relates to the movement of workers.”
The Guardian
By Denis Campbell
23 February 2017
About 12,000 doctors trained in European countries could quit the UK because they feel less welcome following the Brexit vote, according to a survey of overseas medics.
About two in five doctors who qualified in European Economic Area countries are considering leaving the UK in light of the referendum result, research by the British Medical Association reveals.
The findings prompted alarm about an impending “disaster” in medical staffing and fears that an exodus of EEA doctors could exacerbate already significant personnel shortages in NHS hospitals.
The BMA’s findings are based on a survey it undertook of 1,193 EEA doctors working in the UK. When asked if they were thinking about leaving the UK following last year’s referendum vote, 500 (42%) said yes, 309 (26%) said no, 278 (23%) were unsure, while the other 106 did not answer.
“These are the people who staff our hospitals and GP surgeries, look after vulnerable patients in the community, and conduct vital medical research to help save lives. Many have dedicated years of service to healthcare in the UK, so it’s extremely concerning that so many are considering leaving,” said Dr Mark Porter, the BMA’s council chair.
“At a time when the NHS is already at breaking point and facing crippling staff shortages, this would be a disaster and threaten the delivery of high-quality patient care. But this isn’t just about numbers. The quality of patient care is improved where doctors have diverse experiences and expertise,” he added.
The EEA includes the 28 members of the European Union plus Norway, Iceland and Liechtenstein.
Figures from the General Medical Council, which regulates the medical profession, show that there are 280,932 doctors on the medical register. Of those, 177,912 (63%) were trained in the UK, 30,733 (11%) qualified in another EEA country and 72,287 (26%) are from elsewhere in the world.
“While thousands of overseas and EU doctors work across the UK to provide the best possible care for patients, many from the EU are left feeling unwelcome and uncertain about whether they and their families will have the right to live and work in the UK after Brexit,” said Porter.
European doctors feel significantly less appreciated by the UK government now than before the referendum. Their average rating on that score has fallen from seven out of ten before the vote to leave the EU to less than four out of ten now.
Similarly, they also feel a lot less committed to working in the UK since the Brexit vote. Their average rating on that question has fallen from nine out of ten before the referendum to six out of ten.
“Since the result of the EU referendum I feel increasingly uncertain about my future here, and am considering returning to Germany. It is unsettling that in a country that I have contributed to for 20 years and consider home, I am now seen as a foreigner and have to prove that I deserve to live and work here,” said Dr Birgit Woolley, a German-born GP who has worked in Britain for 20 years.
“I feel supported by my patients, with even those that voted leave telling me: ‘You can stay because you’re a doctor. We like you. We didn’t mean you.’ But the reality is that the government does not appreciate what EU nationals like me have contributed to the UK, and only sees us as bargaining chips.”
Luciana Berger, a Labour member of the Commons health select committee, said: “These extremely worrying BMA figures show the huge contribution made by doctors from the EU, and the severe risk that hundreds will leave the UK as a direct result of Brexit.”
A Department of Health spokesman said: “As the government has repeatedly made clear, overseas workers form a crucial part of our NHS and we value their contribution immensely.
“We want to see the outstanding work of doctors and nurses who are already trained overseas continue, but at the same time we have been very clear that we want to give more domestic students the chance to be doctors, given the enduring popularity of this as a career.”

Select Milano Monitor 20/02/2017

L’ora Quitidiano
19 February 2017
Summary from Italian:
·         According to reports from the Ministry of Finance, it does not now appear that the Tobin Tax will be imminently abolished.
·         Italy stands to gain if the tax were to be eliminated, however; Select Milano’s efforts to make Milan a financial capital post-Brexit are mentioned, with the author noting that the city’s post-Brexit gains may be smaller without the tax’s abolishment.
Milano Finanza
By Alessandro Pagano and Bepi Pezzulli
16 February 2017
Summary from Italian:
·         The City of Milan, the Ministry of Economy and the Ministry of Foreign Affairs presented on Thursday “Italy Now and Next”—a joint central/local government initiative to reflect on shared development post-Brexit.
·         Milan must learn to be credible to investors, and in turn can see significant growth and gains in its partnerships with the EU and the UK.
·         Potential and future institutional gains in Milan include the EMA (the only campaign that has officially been launched by the government, thus far), Euro clearing activities (benefited by Milan’s existing links with the LSE Group), CyberParco (cybersecurity and technology park with the potential to work alongside international banks), the Human Technopole (centre for human technologies) and greater partnerships between English and Italian universities.
·         Milan has many research, professional, fiscal, infrastructural and cultural advantages over its European competitors in the race to win post-Brexit business. A chance should be given to Italy to show what it has to offer to the world.
Milano Finanza
By Ugo Poletti and Sebastiano Di Betta
18 February 2017
Summary from Italian:
·         The tactics of the French and German post-Brexit task forces is discussed. The French task forces comprises remarkable individuals like the Mayor of Paris and the President of the region of Ile-de-France, among many others. Its objective is to make Paris the capital of smart finance. The group came to London in February to try to “seduce” financial institutions and companies to make Paris their new home after Brexit. The response by banks was largely cold given the well-known “anti-rich” attitude of President Hollande and the rigidity of French labour laws and unfavourable business taxation. Only HSBC has announced its intention to move 1,000 employees there.
·         On 30 January, many international bankers from various institutions travelled to Frankfurt to discuss a potential transfer of some operations to the city. However, the difficult task in this is to convince well-paid bankers to leave their homes for Frankfurt which is quite small and “dull”; it is also difficult to find the standard of apartments that these individuals would be used to.
·         Though it’s late in the game, Italy now has its own task force to promote Milan within this context. It will soon go to London to meet with British, American and Asian bankers who have not yet engaged with Paris and Frankfurt.
Affari Italiani
By Franco Sottobosco
16 February 2017
·         On his tour of European capitals to discuss post-Brexit business relations, London Mayor Sadiq Khan passed over Milan.
·         While the Italian Government and ministers are working to encourage businesses to come to Milan, it has stiff competition and must work hard to convince Brussels that it would be an excellent host for the EMA in particular.
·         Select Milano’s initiative to bring financial institutions to the country falls largely on deaf ears, with international banks seemingly rejecting the idea.
18 February 2017
Summary from Italian:
·         Italy has seen its first post-Brexit gain with Deutsche Bank and Credit Suisse moving some Italian personnel to Milan from London.
·         Bepi Pezzulli asserts that this type of move can be the “beginning of a long wave”; multinationals like the two banks have significant interest in reinforcing their Italian operations.
·         For those individuals and companies in the area of finance that come to Milan, they will receive tax exemptions (on 50% of income for five years), and they will also have the opportunity to take advantage of the new arbitration function within the CONSOB as a means to settle financial disputes (up to €500,000).
Italia Oggi
By Paolo Panerai
18 February 2017
Summary from Italian:
·         Select Milano’s weekly Dossier Brexit columns (Milano Finanza) are discussed, with the author noting that these act to demonstrate why Milan is such a desirable locale for those companies and institutions leaving the UK post-Brexit.
·         The group’s campaign to garner the Euro clearing market, in particular, is discussed; the author asserts that Frankfurt does not have the appropriate physical or financial capacity to hold such activities.
·         The only paper to put the recent “Brexit task force” meetings of Ministers Padoan and Alfano with Mayor Sala, among others, on its front page was Milano Finanza; this campaign deserves greater recognition.
·         The recent move of Italian personnel to Milan from London by Deutsche Bank and Credit Suisse is mentioned; country manager of Credit Suisse Federico Imbert noted that Milan can grow significantly as a financial centre, particularly if it focuses on civil justice reforms. Select Milano’s role in the development of the arbitration body within the CONSOB is mentioned.
Milan and Brexit:
By Dan Liefgreen and Sonia Sirletti
16 February 2017
Italy has formed a task force to lure financial firms from London after Brexit, attempting to attract banks, asset managers and private equity companies to Milan by offering tax incentives for high-skilled talent.
Finance Minister Pier Carlo Padoan and Milan Mayor Giuseppe Sala are meeting financial executives in Italy’s business capital Thursday to make another pitch for those bound to leave London. Italy’s government will coordinate a group of representatives from the country’s central bank, securities regulator Consob and the city of Milan to deal with the companies and institutions seeking alternative hubs within the European Union.
Padoan said Italy has approved a package of measures that include: a three-year tax exemption on 90 percent of remuneration for professors and researchers; a five-year exemption on half of remuneration for managers and professionals; and a 15-year substitute tax of 100,000 euros ($106,300) on all foreign-source income.
“We have wiped out the competitive disadvantage with other European countries, making Italy one of the most attractive locations for human capital,” said Fabrizio Pagani, the Italian Finance Ministry’s chief of staff. The task force also will meet with companies, especially in the financial industry, in London and New York in coming months, he said.
Milan is competing with rival cities including Dublin, Frankfurt and Paris for talent as financial firms prepare to set up new hubs inside the European Union before Britain leaves the bloc, expected in 2019. Global banking executives have warned U.K. Prime Minister Theresa May that they will soon start shifting operations and jobs from London.
In addition to the campaign to bring post-Brexit private firms to Milan, Sala said the city’s top priority is to woo the European Medicines Agency from London. “Vienna and Amsterdam are dangerous competitors, but we believe Milan can compete.”
Sala, who headed Milan’s International Expo before becoming mayor, said he expects a decision on EMA by September.
(Note: This story also features across Italian press including in Il Giornale, La Repubblica, AdnKronos, Ansa, and Milano Today, among others.)   
By Mark Bendeich
16 February 2017
The European Union is likely to select a new home for the bloc’s London-based medicines regulator by June, according to the mayor of Milan, one of several cities vying to host the organisation after Brexit.
The European Medicines Agency (EMA), which employs 890 staff, acts as a one-stop-shop for drug approvals across the EU, but its future location is unclear after Britain’s decision to leave the bloc.
“There is a sort of urgency. It will depend on the final resolution with the UK (on Brexit) but according to our information, probably in April they will decide to define that. In a couple of months they will choose the final destination,” Mayor Giuseppe Sala told a news conference in Milan.
He said it would then be a couple of years before the agency actually moved.
The EMA is the largest EU body in Britain and is a prize for rival cities seeking to attract high-skilled jobs.
Other countries vying to host the agency include Denmark, Sweden, Spain, France, Ireland and Poland. As well as creating jobs, the EMA has the potential to act as a hub for pharmaceuticals, one of Europe’s most important industries.
Sala was flanked at the briefing by Economy Minister Pier Carlo Padoan who, along with Italy’s prime minister and president, are lobbying to persuade the EMA and also the European Banking Authority to relocate to Milan from London.
Italy has also formed a task force to attract EU institutions and banks looking to leave London as a result of Brexit, and recently enacted personal tax incentives for professional managers and wealthy non-residents coming to Italy.
These include a halving of personal income tax or, for the super rich, a flat annual income tax of 100,000 euros.
Asked if Milan had already received positive signals over the EMA, Sala said: “We know that many cities in Europe are competing. It’s difficult to say now … It’s clear to everybody that it’s a political issue.”
A spokeswoman for the EMA in London declined to comment on the timing of any move, noting the location of the agency after Brexit would be determined by EU member states by common agreement.
The uncertainty surrounding Europe’s equivalent of the U.S. Food and Drug Administration is a concern for drugmakers, who worry that Europe’s drug approval system might face disruption and potential delays.
There is particular anxiety about relations between the EMA and a future separate British drugs regulator. Drug company executives are braced for Britain to quit the pan-European medicines regulator as part of Brexit, but they want the country to continue to work closely with the EMA by agreeing reciprocal rules for drug approvals.
By Jon Rogers
17 February 2017
Italian Foreign Minister Angelino Alfano, alongside Economics Minister Pier Carlo Padoan and the city’s Mayor Beppe Sala, said: “We have to turn Milan into the capital of the post-Brexit EU”.
The Italian capital is already looking to attract the European Medicines Agency which is currently located in London which could bring with it around 1,000 jobs.
But Milan, already known for being the fashion capital of Italy, is already trying to attract more companies.
Earlier in the week Amazon announced it will open offices near the Porta Nuova area, where already Samsung and Google have set up offices.
Microsoft also opened up an office in the city a few days ago.
The Italian government has now established a task force – involving the city’s authorities, the Bank of Italy, the Revenue Agency, police, the Chamber of Commerce and Consob (La Commissione Nazionale per le Società e la Borsa) – in an attempt to bring firms and banks to the city.
Mr Sala said: “Milan is attractive, every month there is a new door opening.”
Mr Alfano added: ”Milan is a different city. It does not have some of the big limitations and bottlenecks of other cities.
“Civil justice is at European levels, the underground works well and costs less than in London, and security and bureaucracy are fine.”
Financial incentives have already been introduced in the budget last December with tax incentives.
Managers moving to Italy for five years will be taxed only on half of their pay and if anyone has a sizeable fortune abroad they will only pay a one-off fee of €100,000 for income earned outside of the country.
Coima property developer Manfredi Catella said: “International investors are looking at Italy with great interest in general and at Milan in particular.”
The President of the Finance Commission Maurizio Bernardo said: “The group of 100 experts who accompanied me to create projects and initiatives, including legal ones, is ready to bring the EMA team to Milan and form the financial district.”
Mr Sala added: “We have difficult issues to address and the coming months will be very delicate. Let’s make this government work.”
The Irish World
14 February 2017
Ireland’s financial industry could benefit from Brexit with an estimated £1.5 trillion worth of banking assets set to depart UK shores once the country leaves the EU, according to a new report.
Bruegel, a Brussels-based think tank, anticipates that up to a fifth of wholesale financial activity within the EU could shift to Ireland following Brexit.
It currently holds a two per cent share but, with London dominating the sector with 90 per cent, this could shoot up to 18 per cent once things are moved around. Whatever the situation, the report states clearly that the UK’s wholesale banking will suffer due to its decision to leave the EU.
“About €1.8 trillion, or 17 per cent, of all UK banking assets might be on the move as a direct consequence of Brexit,” it says.
Whether capital markets services move towards an integrated wholesale market or one that fragments along national lines, “the UK’s share of the total European wholesale market drops from 90 per cent to 60 per cent because of Brexit”.
The paper predicts that Frankfurt would be the largest beneficiary if it were to go down the fragmented route. Since it is home to the European Central Bank and the second-biggest player after London, it could end up with 45 per cent of the EU wholesale market post-Brexit.
Paris would cover 20 per cent, while Dublin would be looking at 15 per cent and Amsterdam ten per cent. Spread out, however, as would be the case following integration, Dublin would take an estimated 18 per cent share while Frankfurt’s coverage would shrink to 35 per cent.
The authors explained that it will take time to weigh up which system will provide the greatest return for each country in terms of costs and benefits.
“The fact that several countries are vying to attract business from London suggests that they hope to reap the benefits from having larger financial sectors, not least in the form of additional tax revenue,” they said. “At the same time, countries with larger financial sectors face higher potential costs associated with potential public expenditure in case of financial turmoil.
“These potential costs would be shared by all Euro-Area countries in a full banking union, but not in an incomplete banking union, as is currently the case.
“It will be a challenge to keep a sense of the balance between the benefits and potential costs across euro-area countries.”
The report also claimed that about 10,000 banking jobs and 20,000 related professional service roles will become available elsewhere. As well as citing Frankfurt, Paris, Dublin and Amsterdam as potential beneficiaries, it suggested Brussels, Luxembourg, Warsaw, Milan and Vienna among others could be set to gain.
PM Live
By Helen Roberts
14 February 2017
The UK government is being challenged on many levels regarding its plans to negotiate a ‘Brexit’. An important question for pharma and innovation is, will the UK government continue with its plans to formally ratify an international convention on patents called the Unified Patent Convention (UPC), that has taken about 40 years to negotiate.
Recently the opposition Labour party revealed that it raised questions in the House of Commons on this: specifically, it asked:
·         Does the UK government plan to proceed to formally sign up to the UPC?
·         If not, what steps is it taking to negotiate an alternative agreement?
·         Will it clarify whether the UK will be able to host a pharma division of a new UPC Court in Aldgate Tower, if the UPC goes ahead?
The UK government should answer these questions before March 2017 but it has not confirmed when it will respond in detail.
The Unitary European Patent system aims to support innovation by cutting red tape and costs, and saving time by automatically validating a single patent in all EU and other countries that have signed the UPC treaty. EU countries that wish to sign the treaty must also agree to implement the relevant EU regulations on a ‘European Unitary Patent’. This will provide key advantages for both inventors and life science investors by creating a more streamlined system for filing and registering patents, and for litigating against patents.
Under the current treaty for the UPC, the three countries with the highest number of European patents in force when the treaty was agreed (UK, France and Germany) would be the hosts for the three UPC courts of the new system. London would host the court that dealt with litigation on life science patents. Expert judges are being recruited from countries that have ratified the UPC treaty. Potential British and other judges have already been pre-selected.
If the UK does not sign the treaty, both the Netherlands and Italy are interested in hosting this new court. Italian authorities have started the procedure to formally ratify the UPC treaty. This will be completed by early 2017. Italy has registered more patents than the Netherlands and has also designated a court building that is available to accommodate the new UPC court in Milan.
What is the issue for the UK government?
Politically, the UK government feels that it cannot continue to accept the power of the European courts in Luxemburg and the supremacy of EU law over UK courts and English and UK laws. However, participation in the UPC system includes accepting that the judgments of the European courts will prevail over judgments of the UK courts, even if the Unified Patent Court is distinct and independent from other European institutions.
Until the UK government decides on a clear position on the treaty, the UK remains a ‘contracting member state’ of the UPC system and its representatives will continue to influence the initiative. If the UK refuses to ratify the UPC treaty, the current UPC treaty is likely to be renegotiated and the launch of the new life science UPC court will be delayed. The UPC treaty has not yet been ratified by Germany, but France and 10 other European Member States have signed the treaty.
Although renegotiation could lead to a long-term delay for the new system, it might provide a window of opportunity for those countries that are not members of the European Economic Area to consider joining the UPC system. This would extend the influence of the UPC system and EU law, and it would support the harmonisation of how to define and prove innovation in life science patents. As English would be the core language for life science litigation, and within the industry itself, there would be translation costs to consider if the court was not based in the UK.
Delays would be strongly discouraged by the global life science sector as it continues to rely on patent and other IP rights to support its investments in innovation and generate revenue for new research. Investors also seek the benefits the UPC system will provide.
A unified international UPC system that offers the possibility of resolving disputes more quickly and more efficiently is still essential, both within and outside the European Union.
Europe and Brexit:
The Economist
18 February 2017
“WHEN the vote took place,” says Valérie Pécresse, “it was an opportunity for us to promote Île de France”, the region around Paris of which she is the elected head. Two advertising campaigns were prepared, depending on the result of Britain’s referendum last June on leaving the European Union. The unused copy ran: “You made one good decision. Make another. Choose Paris region.”
Brexit has made Paris bolder. Once Britain leaves Europe’s single market, the many international banks and other firms that have made London their EU home will lose the “passports” that allow them to serve clients in the other 27 states. Possibly, mutual recognition by Britain and the EU of each other’s regulatory regimes will persist. But no one can rely on the transition to Brexit being smooth, rather than a feared “cliff edge”. Best to assume the worst.
Britain is expected to start the two-year process of withdrawal next month. Given the time needed to get approval from regulators, find offices and move (or hire) staff, financial firms have long been weighing their options. London will remain Europe’s leading centre, but other cities are keen to take what they can.
The Parisians are pushing hardest, pitching their city as London’s partner and peer. “I don’t see the relationship with London as a rivalry,” says Ms Pécresse. “The rivalry is not with London but with Dublin, Amsterdam, Luxembourg and Frankfurt.” Especially, it seems, Frankfurt. Paris has more big local banks, more big companies and more international schools than its German rival. London apart, say the French team, it is Europe’s only “global city”. When, they smirk, did you last take your partner to Frankfurt for the weekend?
This month the Parisians were in London, briefing 80 executives from banks, asset managers, private-equity firms and fintech companies. They are keen to dispel France’s image as an interventionist, high-tax, work-shy place. The headline corporate-tax rate is 33.3% but due to fall to 28% by 2020. A scheme giving income-tax breaks to high earners who have lived outside France for at least five years will now apply for eight years after arrival or return, not five. The Socialists, who run the city itself, and Ms Pécresse’s Republicans are joined in a business-friendly “sacred union”, says Gérard Mestrallet, president of Paris Europlace, which promotes the financial centre. Ms Pécresse and others play down the risk that Marine Le Pen, of the far-right, Eurosceptic National Front will win the presidential election this spring.
More quietly, Hubertus Väth of Frankfurt Main Finance (the counterpart of Paris Europlace) is “pretty confident” about his city’s ability to attract more bankers. To Mr Väth, the big prize is the clearing of trades in euros, which London dominates but which both Frankfurt and Paris hope to snaffle. The European Central Bank once tried to force clearing to move from London to inside the euro zone, but was thwarted in 2015 when EU judges ruled it lacked the necessary authority. After Brexit, it may try again.
Nicolas Mackel of Luxembourg for Finance, the grand duchy’s development agency, is relatively “laid back”. All are welcome, Mr Mackel says, but no taxes or regulations have been changed, nor applications fast-tracked. Business has been brisk anyway, because of the duchy’s expertise with fund managers. China’s big banks use Luxembourg as a continental hub.
After a slow start, the Dutch too are trying to gain from any “Brexodus”. The foreign-investment agency has expanded its (small) office in London. The Netherlands offers a high quality of life and almost everyone speaks English. But Amsterdam’s financial centre lacks the scale of Frankfurt or Paris, and is short of housing and schools. A cap of 20% of salaries on bankers’ bonuses is also off-putting, although the finance ministry says global banks may be exempt under certain conditions.
Dublin is keen to attract more asset managers. Irish central bankers are worried about whether they have the right expertise to regulate, say, complex trading. Some would be relieved if the hordes do not materialise. The city is already short of office space, housing, roads and international-school places.
The size of the prize is hard to gauge. Much depends on the post-Brexit agreement between Britain and the EU, and what regulators demand in capital and personnel. Banks may also shift some work out of Europe, to New York, or even Hong Kong or Singapore. Some services, warns a banker, may not be provided at all. Mr Väth thinks that, with euro clearing, Frankfurt could see an extra 10,000 jobs or more. Arnaud de Bresson of Europlace estimates that Paris stands to gain 10,000 “direct” posts in finance and fintech, plus 10,000-20,000 in law, accountancy and so on. Europlace hasn’t tried to quantify the number tied to clearing.
Different institutions have their own priorities. HSBC, a big British bank, has already said that it expects to move around 1,000 jobs to Paris, where it already has a subsidiary; some other banks still sound wary of the place, despite the best efforts of the French. Switzerland’s UBS, which also says around 1,000 London jobs are at risk, set up shop in Frankfurt last year: that seems a natural base, although its bosses have also mentioned Madrid. Fund managers not already in Dublin or Luxembourg are likely to head there. Lloyd’s of London, an insurance market, and Blackstone and Carlyle, two American private-equity giants, reportedly favour Luxembourg for their EU home.
The continental European financial centres all say they have acres of space for new arrivals. There should be more than enough, at least for now. “We’re not talking about banks moving lock, stock and barrel,” says Lee Elliott, head of commercial research at Knight Frank, a property consultancy. All banks have bases in all the main centres and after the downsizing of recent years, they still have vacant space. James Maddock of Cushman & Wakefield, another property-services firm, says that since 2008, banks in Europe have shifted 34,000 back- and mid-office jobs to eastern Europe, a further 5,050 to Ireland and 14,200 to British cities outside London. Brexit will involve fewer (if better-paid) people.
But in all the cities vying for post-Brexit trade, a common refrain is heard: we wish it wasn’t happening. In Luxembourg too, Mr Mackel says, an ad was planned for the day after the referendum: “We would have missed you.” It didn’t appear.
By  Gavin Finch, John Detrixhe, and Peter Flanagan
14 February 2017
When Rob Boardman is scouring Dublin to hire for his firm’s electronic broking and dark-pool business, it can take up to a year to find the right candidate.
“It’s a question of quantity of talent, not quality,” said Boardman, Investment Technology Group Inc.’s European chief executive officer, who has been recruiting in the city since 2010. “It can be hard to hire in financial services for front-office traders.”
Dublin shares similar laws and regulations as its U.K. neighbor and is the only other English-speaking hub in the European Union, making the city a go-to option for London-based banks seeking uninterrupted EU access post Brexit. One big problem: a talent shortage. More people work in finance in Edinburgh than in the whole of Ireland, posing a concern for the half-dozen global banks who are considering setting up camp there.
“There are probably more Irish bankers working in London than there are in Dublin,” said Jonathan Astbury, partner in global markets at executive search firm Newington International. “There is still a sense among front-office types that if you’re not in London, you’re not at the cutting edge. Ultimately, London is going to remain the center of the banking world for many years to come, so Dublin is going to be a hard sell for them to attract the best people.”
While cities across Europe have begun courting banks and their high-paying roles, all the potential locales have their drawbacks. Financial firms have concerns over language issues, labor laws and taxes in Frankfurt and Paris.
What will start as a trickle — banks plan to move only a couple of hundred jobs into their new bases at first — could quickly become a torrent if it looks like the U.K. is heading for a “cliff edge” Brexit, whereby all EU access is cut off by 2019. Firms weighing Dublin for their new base plan to initially relocate Irish employees currently working in London, according to two people with knowledge of their firm’s contingency plans.
Lacking Depth
There are about 35,000 people working in finance in Ireland, compared with more than 60,000 in Frankfurt, 180,000 in Paris and 360,000 in London. Goodbody, Ireland’s oldest stockbroking firm, estimates that Dublin could gain as many as 15,000 financial jobs from Brexit.
The talent shortage may not scare off banks that see Brexit as an opportunity to reduce costs. A few large international banks have held discussions about moving a small number of senior managers to their new EU hubs to train cheaper local hires while London jobs are cut, according to two recruiters who said they’ve had talks with the firms.
Irish officials acknowledge that the country lacks the depth of banking talent available in other cities competing for Brexit spoils, but say they are confident they can attract workers from elsewhere in the EU. They point to the 250 financial institutions already in Dublin, including Citigroup Inc., JPMorgan Chase & Co. and Credit Suisse Group AG. Major tech firms, such as Alphabet Inc.’s Google, EBay Inc. and PayPal Holdings Inc., also have European operations there.
Moving Back
“In the context of a U.K. which will potentially be outside the EU where there won’t be such mobility, we are likely to win more of these highly skilled people coming to Ireland, and I think that’s the way our companies and potential investors are reading it,” said Martin Shanahan, the CEO of IDA Ireland, the agency tasked with attracting international investment. “If the skills are going to be available, they are going to be available in Ireland.”
There’s a wide range of financial companies considering an Irish outpost. Besides the largest banks, trading platforms like currency venue LMAX Exchange and Bats Global Markets Inc.’s London unit are also on the list. Chicago-based derivatives behemoth CME Group Inc. has examined Dublin as it seeks to ensure its clearinghouse retains access to EU customers, people familiar with the discussions said in November.
Brexit could help reverse a trend: For decades, the brightest Irish university graduates with ambitions in finance have sought out their fortunes in the narrow lanes of London’s square mile, according to Denis Curran, the IDA’s head of international financial services.
“If front-office or investment-banking jobs do come to Dublin as expected, then it would act as an incentive for Irish in those roles in London who may want to move back,” said Peter Cosgrove, a director at Dublin recruiting firm CPL. “Up to now, the type of finance jobs available in Ireland have generally not matched London for compensation and other perks. Already, we have seen a spike in inquiries from Irish in London and EU nationals who were considering moving to the U.K. but are looking closer at Dublin as an alternative.”
Where all these people are going to live and work is another matter. Dublin already suffers from an acute shortage of residential housing, particularly at the top end, a legacy of the country’s property crash. And while prices are significantly lower than in London, they’re rising fast.
Vacancy rates for prime office space in the city center are also at record lows. And Dublin is home to only five Michelin-starred restaurants — a must for any well-heeled investment banker — compared with more than 60 in London and 100 in Paris.
Irish Times
15 February 2017
Some international financial services (IFS) companies have already decided to create more jobs in Dublin as a result of Brexit, although they are unlikely to communicate it in this way for political reasons, Minister of State for Financial Services Eoghan Murphy has told the Oireachtas finance committee.
Mr Murphy, who has responsibility for IFS strategy, said some other companies have made contingency plans to move certain activities here as they await the outcome of negotiations between the United Kingdom and the rest of the European Union on its withdrawal from the trade bloc.
Mr Murphy declined to put a figure on the number of jobs that Ireland might win from Brexit but predicted that the State would now exceed its target of creating 10,000 new IFS jobs by 2020. This target was set before the Brexit vote.
“Because they [the IFS firms] don’t yet know what this means for them they can’t put a number on it. And if they can’t we can’t,” he said.
In terms of the quality of jobs that might transfer here, Mr Murphy said: “We are going to see high-end jobs coming into this country. And it won’t just be in Dublin.”
In response to a question from Fianna Fáil’s Michael McGrath, Mr Murphy voiced concerns that some other EU countries might be using unfair offerings to attract IFS jobs in the wake of Brexit, particularly around regulation and supervision.
“I would describe it as dangerous competition,” he said. “It bothers me when I hear that other jurisdictions are potentially making commitments in terms of what regulation or supervision they might put in place. What we have heard from some companies would make me question whether or not they [other countries] are being prudent.”
Mr Murphy said these concerns have been communicated by the Government in Brussels and that the issue has been raised with the Central Bank of Ireland.
Separately, French financial institution BNP Paribas is seeking about 50,000sq ft (4,600sq m) of office space in Dublin, according to a report from Bloomberg.
BNP’s representatives have toured available office blocks in the city, a source said. BNP employs 500 people across four locations in the city, the French lender said in an email response to questions.
“We constantly look at ways of optimising our operational set-up and are in the very early stages of exploring the possibility of consolidating these four offices into a single one,” BNP said. “We are not looking for additional space in Dublin and have no plans to move offices at this stage.”
BNP’s decision is unrelated to Brexit, one of the sources said. Still, it may add to a squeeze on office space as a host of UK-based companies plan to move staff to EU locations to retain market access.
Barclays may move about 150 staff to Dublin, while Citigroup, Morgan Stanley and Credit Suisse Group have considered moving some operations to Dublin. HWBC forecasts prime office rents in the city will rise 8 per cent this year after 9 per cent in 2016.
By Ben Chapman
17 February 2017
Paris will not replace London as Europe’s financial capital after Brexit because French people are not financially minded, the boss of a $60bn French private equity fund said on Wednesday.
Speaking at the Cass Business School in London, the Financial Times reported Dominique Senequier as saying:
“London has always been the number one financial city in Europe. It may no longer be in Europe [after Brexit] but for me it won’t change the situation. It will still be London, and not only London, but people who are financially minded.
“French people are less financially minded. I’m not afraid to say that because I say it very regularly. We have many other things. We are very good cooks. We have the Mediterranean and we are very good entrepreneurs.”
She added: “I was amazed by London at 25 years old and [it is] still the same. I don’t believe that Brexit will change this.”
The words come as European cities including Paris, Frankfurt and Dublin have launched campaigns to lure companies and jobs from the lucrative sector, once the UK leaves the EU.
Earlier this month a delegation of French politicians descended on London to make the case for the French capital. At a press conference, Valerie Pecresse, president of the Paris region told reporters that “tens of thousands of jobs” could move from London to Paris but the moves would happen slowly, adding “when was the last time you took your partner for a weekend in Frankfurt?”
A host of major finance firms have said they will move jobs to continental Europe because the UK will lose “passporting” rights to trade freely across the continent once it leaves the single market.
While it may be possible for the UK to maintain favourable access if its regulatory regime is deemed equivalent to the EU’s, there is no certainty that this will be agreed. Many banks and others are taking a “safety first” approach by beefing up their European operations to avoid any risk of a cliff edge when Brexit actually happens.
HSBC boss Stuart Gulliver said in January the UK’s biggest bank would move 1,000 trading jobs, while UBS has suggested similar numbers of its staff would relocate.
JPMorgan chief executive Jamie Dimon told reporters at the World Economic Forum in January that “It looks like there will be more job movement than we’d hoped for”. The bank is rumoured to be mulling up to 4,000 Brexit-related job moves.
By Saphora Smith
20 February 2017
Oxford University may open its first ever campus overseas because of Brexit.
French officials have held talks with Oxford University about opening a sister campus in Paris, a move which could guarantee the university European funding after Brexit, The Telegraph reported.
Oxford and other British universities, including Warwick, have been told that any campus they open in France would enjoy French legal status and could therefore continue to receive European funding.
Opening these satellite campuses would mean relocating degree courses and establishing joint study programmes.
British universities have warned MPs that Brexit could mean “disaster” for higher education if European funding is withdrawn.
A spokesman for Oxford University told The Telegraph a decision had not yet been made but said: “Oxford has been an international university throughout its history and it is determined to remain open to the world whatever the future political landscape looks like.”
Jean-Michel Blanquer, a former director-general of the French ministry of education, confirmed to the paper that discussions between British universities and the French government were taking place.
If a decision is made to push ahead with the plans, construction of the campus could reportedly begin as early as next year.
Dutch News
14 February 2017
The Dutch financial services regulator AFM and Amsterdam officials are in talks with a number of companies considering relocating from Britain because of Brexit, the NRC said on Tuesday.
An AFM spokesman told the paper a number of ‘financial market companies’ have reported to the regulator to ‘orientate themselves about relocation’. So far, the spokesman said, officials have had talks with ‘several dozen’ companies, including traders, asset managers and companies which sell financial data.
Amsterdam’s economic affairs alderman Kajsa Ollongren told the paper her talks have become ‘more concrete’. ‘Companies are coming to have a look around,’ she said, adding that she is talks with ‘more than a handful’ of financial and non financial firms.
Mid-January, British prime minister Theresa May said that Britain would be leaving both the EU and the EU’s internal market. This could mean financial firms based in London would lose direct access to the EU, the paper pointed out.
European market
The Dutch foreign investment agency NFIA has a small office in London, but doubled the personnel from three to six in the wake of the Brexit vote. It is targeting all companies which are active on the European market, not just financial firms.
Rotterdam also sees opportunities to bring in firms from London, the city’s economic affairs alderman Maarten Struijvenberg told the paper. He hopes to attract maritime service providers, including insurance companies, to relocate to the port city.
Consultancies such as EY and KPMG are also helping companies looking to relocate, the paper said. For example, EY has issued a brochure outlining the benefits of the Netherlands, including the fast internet, language skills and good quality of life.
However, the 20% ceiling on bankers’ bonuses is an issue, even though it does not apply to international banks, Ollongren said. The shortage of international school places in Amsterdam itself is also a concern.
International Business Times
By Karthick Arvinth
14 February 2017
Lloyds is considering setting up a subsidiary in Berlin to retain access to the single market after the UK’s exit from the European Union, according to reports.
The lender, which is nearly 6% state-owned, already has a branch in the German capital with a full management team in place and would only need to change the status of those roles to meet legal requirements for a subsidiary, a source was quoted as saying by Reuters.
It is unclear if Lloyds intends to move more staff from Britain to Germany, where it operates through the Bank of Scotland brand.
Lloyds is the only major British bank without a subsidiary in another EU country and has been drawing up plans to retain access to the single market after Brexit.
It had previously explored setting up a subsidiary in Amsterdam and Frankfurt, where the European Central Bank is located.
Lloyds employs around 300 people in Berlin via its Bank of Scotland business, including finance, risk and human resources staff.
It handles around £9bn ($11bn) of consumer deposits at the branch, a source told Bloomberg.
Last month, both HSBC and Swiss bank UBS announced that they were preparing to move 1,000 jobs each out of the UK as a result of Brexit.
“Activities specifically covered by EU legislation will move, and looking at our own numbers, that’s about 20 percent of revenue,” HSBC chief executive Stuart Gulliver told Bloomberg in January.
“Some of our fellow bankers have to make decisions quickly” if they did not have a subsidiary in continental Europe, he added.
Prime Minister Theresa May said in a speech on 17 January that the UK will exit the European single market.
“I want to be clear: what I am proposing cannot mean membership of the single market,” she said.
“It would, to all intents and purposes, mean not leaving the EU at all.”
Formal Brexit negotiations are set to get underway after May’s government triggers Article 50 of the Lisbon Treaty by the end of March.
Finance Magnates
By Victor Golovtchenko
20 February 2017
London’s bankers have been outspoken about their plans to leave London in light of the Brexit process that is being prepared by the UK government. As they contemplate the move, the European Union is considering a financial transaction tax.
Over the weekend, reports that the effort – which is limited to 10 countries in the EU – has stalled are making the race for London’s financial sector jobs more intense. Some of the main contenders for a new European financial hub are immune from the risks of a financial transaction tax – Dublin, Copenhagen and Amsterdam.
The position of Paris and Frankfurt could be well jeopardized by the proposal, which is currently in discussion in 10 EU countries, but the latest news is positive for the industry.
The participants discussing the details of the proposal are said to be facing substantial hurdles. A Bloomberg report over the weekend cited two officials with knowledge of the matter that stated that the 10 nations lack consensus over possible exemptions for pension funds.
The finance ministers of Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain are set to meet in Brussels on Feb 21 to attempt to put the effort back on track.
Banks Unlikely to Move from London if Tax Plans Go Through
In the aftermath of the financial transaction tax decision, the European Union’s bureaucrats could well deter plans for relocation to Paris or Frankfurt. In the case that a financial transaction tax is enacted, the European financial intermediaries’ business prospects are likely to suffer materially.
Any prospective accord is to be met with stiff resistance from Denmark, Ireland, the Netherlands, and Luxembourg. The countries have not committed to the proposal and are not willing to introduce a financial transaction tax. This could lead to even more fragmentation of the European financial system – a scenario which London-based banks fear.
Trump Financial Reg Overhaul Threatens EU Competitiveness
Aside from an EU financial transaction tax, the European Union’s competitiveness is set to come under threat by the overhaul of US regulations. A substantial rollback of the Dodd-Frank Act and the prospects for a new approach to regulatory oversight in the US pose substantial risks to the long term plans of a number of big EU-based banks.
The Trump administration’s Secretary of the Treasury Steven Mnuchin remarked that new bank regulations could be more effective than simply tearing up Dodd-Frank. This is great news for the industry as the new administration is targeting depositor protection, but loosening the shackles of wholesale banks.
By Josie Cox
15 February 2017
One in five UK start-ups is considering  establishing a European outpost in the wake of last year’s Brexit vote, and some have already decided to move their headquarters out of the UK.
According to a survey of over 940 companies conducted by Silicon Valley Bank, a global lender that specifically targets the start-up community, 62 per cent of UK start-ups have ruled out the possibility of opening a European office in response to the UK’s decision to quit the trading bloc, but 21 per cent are considering it.
The survey also shows that 1 per cent have firmly committed  to moving their headquarters to Europe and that 16 per cent are thinking of relocating their headquarters out of the UK—either to Europe or elsewhere.
When asked what their top concern in relation to Brexit is, 32 per cent cited non-British employees’ fears that their long-term opportunities to work in the UK could be at risk.
Others said that they were worried that it may be more difficult to attract venture capital funding in a post-Brexit Britain and that the cost of running a business would rise.
The report chimes with other evidence suggesting that workers across all sectors are bracing for the challenges Brexit might bring.
According to a survey by professional networking site LinkedIn, based on data from more than 3 million people and published earlier this week, Britain saw a sharp dip in the number of university-educated international professionals seeking jobs in the UK immediately before and directly after the Brexit vote.
The Silicon Valley Bank survey also shows that overall optimism among the UK’s start-up community has taken a hit in the last year.
Only 48 per cent of the businesses questioned said that their outlook for business conditions was better now than this time last year, a ten percentage point fall from last year’s survey.
But  despite the uncertainty, appetite for hiring still seems to be intact.
The survey shows that 89 per cent of UK start-ups plan to hire more staff this year and only 1 per cent plan to cut. That’s an even greater proportion than the 79 per cent share of US start-ups that say that they intend to expand, according to the bank.
General Brexit news:
By Rob Merrick
17 February 2017
Tony Blair has insisted Brexit is not “inevitable”, as he urged “millions” of Britons worried about leaving to fight to stop it.
In a controversial intervention in the Brexit debate, the former Prime Minister called for a “revolt” to halt withdrawal, similar to the populist wave that won the referendum.
“The one incontrovertible characteristic of politics today is its propensity for revolt,” Mr Blair told a London audience.
“The Brexiteers were the beneficiaries of this wave, but now they want to freeze it to a date in June 2016.
“They will say the will of the people can’t alter. It can. They will say that leaving is inevitable. It isn’t.
“They will say they don’t represent the will of the people. We do, many millions of them and – with determination – many millions more.”
Mr Blair added: “This is not the time for retreat, indifference, or despair, but the time to rise up in defence of what we believe – calmly, patiently, winning the argument by the force of argument, but without fear and with the conviction we act in the true interests of Britain.”
The former Labour leader also sought to point out the huge costs to the country of a Government focused – inevitably – on the enormous challenge of negotiating a successful withdrawal.
He said: “This is a Government for Brexit, of Brexit and dominated by Brexit. It is a mono-purpose political entity.
“Nothing else truly matters: not the NHS, now in its most severe crisis since its creation; not the real challenge of the modern economy, the new technological revolutions of AI and Big Data; not the upgrade of our education system to prepare people for this new world; not investment in communities left behind by globalisation; not the rising burden of serious crime; or bulging prison populations; or social care; not even, irony of ironies, a genuine policy to control immigration.”
Mr Blair poured scorn the claims that EU membership – and, in particular, rulings by the European Court of Justice (ECJ) – prevent Britain being a truly independent country.
“On the ECJ, I would defy anyone to be able to recall any decisions which they might have heard of, as opposed to the decisions of the European Court of Human Rights, a non-EU body,” he said.
“I can honestly say that during all my time as PM there was no major domestic law that I wanted to pass which Europe told me I couldn’t.”
Before the speech, Iain Duncan Smith, the former Conservative Cabinet minister and a prominent Leave campaigner, condemned the speech as arrogant and utterly undemocratic.
But Mr Blair said: “The people voted without knowledge of the true terms of Brexit.
“As these terms become clear, it is their right to change their mind. Our mission is to persuade them to do so.
“What was unfortunately only dim in our sight before the referendum is now in plain sight. The road we’re going down is not simply Hard Brexit. It is Brexit At Any Cost.
“Our challenge is to expose relentlessly what this cost is, to show how the decision was based on imperfect knowledge which will now become informed knowledge, to calculate in ‘easy to understand’ ways how proceeding will cause real damage to our country; and to build support for finding a way out from the present rush over the cliff’s edge.
“I don’t know if we can succeed. But I do know we will suffer a rancorous verdict from future generations if we do not try.”
20 February 2017
The House of Lords has been urged to “respect” voters’ decision to leave the European Union, as the debate on the government’s Brexit bill began.
MPs have already backed the proposed law authorising Theresa May to inform the EU of the UK’s intention to leave.
Leader of the House Baroness Evans said peers must not “frustrate” Brexit.
But the government does not have a majority in the House of Lords where a record 190 peers are due to speak, with the sitting extended to midnight.
Opposition and crossbench peers are seeking guarantees about the rights of EU citizens in Britain and the role of parliament in scrutinising the process.
Mrs May has said she wants to invoke Article 50 of the 2009 Lisbon Treaty – the formal two-year mechanism by which a state must leave the EU – by the end of March.
In a rare move, the prime minister decided to sit in the House of Lords to listen to the start of the debate.
Opening proceedings, Lady Evans said the government had promised to deliver on the result of last year’s referendum, in which 51.9% of voters backed Brexit.
She said: “This bill is not about revisiting the debate.” She added: “Noble Lords respect the primacy of the elected House and the decision of the British people on 23 June last year.”
For Labour, Lords Opposition leader Baroness Smith of Basildon said the government would not be given a “blank cheque” and that “if sovereignty is to mean anything, it has to mean parliamentary responsibility”.
She promised to make ministers consider “reasonable changes” and this was not “delaying the process” but “part of the process” of Brexit.
But Lord Newby, leader of the Liberal Democrats in the Lords, said the bill could be changed and sent back to the House of Commons for reconsideration, arguing there was a “world of difference between blocking… and seeking to amend it”.
The government’s approach was “little short of disastrous” and “to sit on our hands in these circumstances is unthinkable and unconscionable”, he added.
UKIP’s Lord Stevens of Ludgate said the prime minister “should be congratulated” for “honouring” the commitment to leave the EU, following the referendum.
But he told peers it was better to “leave the EU quickly”, rather than enter negotiations with member states on a post-Brexit deal.
The government has set aside five days in total to discuss the various stages of the EU (Notification of Withdrawal) Bill – starting with its Second Reading, in which peers are debating the general principles of the bill.
The Second Reading debate is due to conclude on Tuesday evening – possibly with a vote, but only if peers break with their usual practice of allowing government legislation through unopposed at this stage.
Although amendments are not voted on at this stage, speeches will be closely watched for signs of the mood of peers on the two key ones of parliament having a “final meaningful vote” on the draft Brexit agreement – and guaranteeing the rights of EU citizens in the UK.
The list of speakers includes former chancellors Lord Lawson, Lord Lamont and Lord Darling and former cabinet secretaries Lord O’Donnell, Lord Butler and Lord Armstrong.
Others expected to contribute include former UKIP leader Lord Pearson and Lord Pannick, the QC who led the successful legal challenge against the government, culminating in the Supreme Court ruling that the prior approval of Parliament was needed before Article 50 was invoked.
Detailed scrutiny of the bill at committee stage is due to take place on 27 February and 1 March. If the bill is not amended, then it could theoretically be approved by the Lords at Third Reading on 7 March, becoming law shortly afterwards.
If peers do make changes to the bill, it would put them on a collision course with MPs – who overwhelmingly passed the bill unaltered and would be expected to overturn any Lords amendments.
Although the Conservatives have the largest number of peers in the Lords, with 252 members, they are vulnerable to being outvoted if opposition peers – including 202 Labour peers and 102 Lib Dems – join forces.
Much will hinge of the actions of the 178 crossbenchers in the Lords – who are not aligned to any party and do not take a party whip.
Once Article 50 is invoked, there will be up to two years of talks on the terms of the UK’s departure and its future relationship with the EU unless all 28 member states agree to extend the deadline.
The Guardian
By Jessica Elgot and Rowena Mason
14 February 2017
Critics of the Brexit bill are increasingly confident that they will be able to win a vital parliamentary battle in the House of Lords, a senior opposition peer said on Tuesday.
Dick Newby, the leader of the Lib Dems in the Lords, said he was confident that enough peers would back amendments on issues such as the rights of EU citizens and parliamentary votes on the final Brexit deal to defeat the government and force a rethink.
He spoke on the same day that Brexit secretary David Davis admitted that he expected the bill to “ping pong” back to the House of Commons with amendments over the next fortnight.
The Brexit bill was passed by MPs last week without amendment despite the efforts of Labour, the Lib Dems and a handful of rebel Conservatives.
Newby said he expected around 230 Labour and Lib Dem peers to back an amendment on EU citizens, as well as most of the crossbenchers and at least two Tory peers. With a number of Tory peers also expected to abstain, he said those numbers should easily defeat the government.
“There are a lot of members of the group for whom Europe is the big thing that has motivated them in politics,” he told the Guardian. “We were complacent, truth be told. But things have turned and people on our side feel very strongly about it.”
Newby said all peers had been told to cancel leave or prior engagements. “There are very, very few votes where we say to people, ‘I don’t care that you’ve got a lecture tour of the States’ because, normally, if people have longstanding commitments you let them off,” he said. “But I don’t think [Lords chief whip] Ben Stoneham is going to be very accommodating to anyone.”
Labour has promised no “extended ping pong” as it does not want to frustrate the timetable for triggering article 50, but it has laid eight amendments on issues from EU nationals to quarterly reporting to parliament about the Brexit process.
However, Newby said he believed Labour peers were more independently minded and many could even be persuaded to back a Lib Dem amendment on a second referendum, given the timing of the Lords vote after the crucial Stoke and Copeland byelections.
“We’ve got three weeks to persuade them,” he said. “What have they got to lose? There are very many strong Europeans in the Labour party. They all know Corbyn is taking the Labour party down a destructive path, they are all beside themselves.”
Newby said peers may be prepared to be more openly pro-European than Labour MPs because they did not have to answer to constituencies. “What’s the point? If you’re 65 and a Labour peer and been pro-European all your life, why just sit on your hands? A lot of them are taking it into their own hands, because I talk to a lot of them.”
Labour peer Peter Hain, a former cabinet minister, has tabled several amendments, including one on the Northern Irish border, which Newby said was gaining traction.
Labour amendments include one backed by crossbench peer Lord Pannick, the QC who opposed the government at the supreme court over the need for parliamentary approval of the triggering of article 50. Pannick’s amendment would require a parliamentary vote on the final Brexit deal, specifying that it should take place before any deal is approved by the European commission or parliament.
Threats that the government would reform the Lords if it did not pass the bill quickly were empty, Newby said. “There is zero capacity in Whitehall to worry about House of Lords reform, it’s ludicrous to even contemplate it,” he said.
Speaking in Stockholm about the bill’s progress through the Lords at a joint press conference with Swedish minister for EU affairs and trade Ann Linde, Davis said he still expected Theresa May to be able to trigger article 50 notifying the EU of the UK’s intention to leave by the end of March.
However, Davis said he was also expecting that the upper house “will do its job of scrutiny, we’ll have some passing backwards and forwards, we call it ping pong, you can imagine why, backwards and forwards of the bill, but I expect that to be resolved in good time before the end of March”.
Davis said he was confident article 50 would be triggered on the government’s timetable, but that did not mean the formal notification would be given at the scheduled summit of EU leaders on 9 March.
Newby said he believed that it would be near to impossible to trigger article 50 on 9 March, but it would be possible by the following week. “My guess is that it could be in the Commons on the 13th and back here on the 14th,” he said. “There will not be a stomach to keep sending it back on most things. You can often get an agreement that meets in the middle, but with EU citizens that is more difficult because either you guarantee them the rights or you don’t.”
Speaking alongside Linde, Davis said he wanted to reassure EU citizens living in the UK that the government wanted discussion of their rights, and those of Britons on the continent, to be the first item on the negotiating table, including issues such as their social support and healthcare. “I don’t see any reason for anybody else to hold this up, once the negotiation starts properly,” he said.
However, the UK government has refused all calls to unilaterally guarantee the rights of EU citizens in the UK without similar assurances for British citizens in the rest of the EU. On Monday the Guardian reported that a leaked EU document had warned that British citizens on the continent could face a backlash as a result of the UK’s treatment of European nationals since the referendum.
Linde raised concerns at the press conference about the rights of EU nationals in the UK, pointing out that about 100,000 Swedes live in the UK and 30,000 Britons reside in Sweden, saying they “must not become a bargaining chip” in the Brexit negotiations.
On Tuesday the finance ministers of Scotland, Wales and Northern Ireland branded quadrilateral Brexit talks with the chief secretary to the Treasury, David Gauke, as disappointing, accusing him of failing to provide enough information on how exiting the EU would affect their nations. During the talks, held in Edinburgh, the ministers urged the UK government to keep the needs of their regions at the heart of any Brexit negotiations.
Scotland’s finance secretary, Derek Mackay, said that keeping Scotland in the European single market was “absolutely essential for Scottish jobs, investment and long-term economic wellbeing”. Welsh finance secretary Mark Drakeford similarly called for “unfettered access to the single market” for Wales.
Stormont finance minister Máirtín Ó Muilleoir said that nothing he had heard during the meeting had changed his view that the UK government had failed to understand “the calamitous effects” that Brexit would have on Northern Ireland’s economy. “There has been no appreciation of the need for a special status for the North within the EU,” he said.
By Ben Chapman
20 February 2017
Finance firms have called on Chancellor Philip Hammond to use next month’s budget to help deliver stability and certainty over Brexit.
With Article 50 due be triggered in March, lobbying group TheCityUK said, a “smooth and orderly exit with as much certainty as possible is in the mutual interests of the UK and the EU and global stability”.
In its Budget submission, the group, which was a vocal backer of the Remain campaign, also demanded Mr Hammond secures a smooth transition period for Brexit with clear interim arrangements, measures to boost regional growth and increase the competitiveness of the tax regime through incremental changes.
TheCityUK said the industry needed a deal which maintained the maximum amount of access to EU markets.
Miles Celic, the chief executive of TheCityUK, said: “The UK is home to the world’s leading international financial centre, powered by an industry which employs 2.2 million people, two thirds of whom are based outside of London in significant centres such as Edinburgh, Birmingham and Cardiff. It is integral to the UK economy, paying almost £72 billion in tax.
“Enhancing the clarity and competitiveness of the UK’s tax regime, bolstering national productivity and supporting innovation across the country should be key priority areas,” Celic added.
TheCityUK also highlighted the opportunities which could arise from a fund set up within the British Business Bank to co-invest with early-stage equity investors, incentivising regional diversity in investments.
Last month the group called Brexit a “once-in-a-generation” chance to boost UK trade and investment, by focusing on building links with fast-growing economies outside Europe.


Select Milano Monitor 13/02/2017

By Mariarosaria Marchesano
11 February 2017
Summary from Italian:
·         Select Milano, a group made up of lawyers, bankers, economists and academics, is working to help take advantage of the Brexit opportunity and ensure that it’s not just France and Germany that receive a share of the businesses being transferred out of the UK.
·         The group is working to raise awareness among politicians and parliamentarians of the benefits of grabbing this opportunity for Milan and Italy, and has even worked with the parliamentary Finance Committee to bring forth a number of resolutions for approval, including one to urge the Gentiloni government to take steps to establish a financial district in Milan through the formation of an EEIG.
·         Group president Bepi Pezzulli emphasises that Select Milano is promoting an apolitical mission. He noted that he realised that something big was going to happen in the world of European finance even before the Brexit referendum when the BoE opened an impressive line of credit with one of the giant Chinese banks. This demonstrated that the UK was preparing to welcome more Asian investments.
·         Though Milan currently only processes €10 billion in Euro clearing transactions daily, compared to Paris’ €141 billion and London’s €570 billion, Mr Pezzulli asserts that the Milan Stock Exchange will be able to absorb a significant increase given existing skills, links and infrastructure.
·         On the issue of the justice system in Italy, Mr Pezzulli says that Italy must first accept the proposed reforms in favour of arbitration, seen as a ‘parallel’ approach to justice in the country, then invest in training to bring this type of litigation into the country’s ordinary judicial channels.
Qui Finanza
13 February 2017
Summary from Italian:
·         Select Milano will begin its roadshow this March in London as it seeks to meet with members of the financial community in the City in an effort to discuss a possible transfer of such companies to Milan.
·         The Italian Government is already gearing up to help bring new business to Milan post-Brexit, evidenced by the recent passage of a bipartisan resolution (with the sole ‘no’ vote coming from the Five-Star Movement) which seeks to urge the government to form the financial district in Milan via an EEIG.
·         MPs are urging the government to act rapidly and to work alongside universities, civil society and business.
Milano Finanza
By Gregorio Gitti and Bepi Pezzulli
11 February 2017
Summary from Italian:
·         When the Monti Government introduced the Tobin Tax, it was originally as part of a larger EU project to set up a common tax on financial transactions (FTT) in an effort to harmonise the taxation of all European financial markets. However, only two countries have actually adopted this tax—France and Italy.
·         The tax has so far not yet reached its initial objectives of increasing revenue to cover further social costs and to reduce market volatility to prevent asset price bubbles. Financial players in the Italian market have seen a shift in revenues of around 25% from Italian securities and instruments to foreign ones. Data shows that the introduction of the FTT simply made investors and savers refrain from trade, resulting in a fall in trade volume of 85%, reallocating portfolios towards untaxed bonds.
·         The FTT has generated an increase in capital cost risk of Italian companies, and made the stock exchange one of the most expensive in Europe. Investors now have incentive to replace securities in Italian companies with those of foreign companies exempt from the tax.
·         The FTT has so far not been able to achieve revenue targets, and has simply resulted in a distortion of competition in the financial markets, decreased overall revenues and caused higher transaction costs in the Italian Stock Exchange. Its abolition would help to bring greater competition to the Italian financial market. Brexit presents a great opportunity to undertake this reform.
Fumo di Londra
11 February 2017
Summary from Italian:
·         Overview of recent Brexit news from the perspective of Italy, covering the recent meeting between prime ministers Gentiloni and May wherein the two confirmed the excellent relations between their two countries, and the Italian PM noted that his country “respected” the UK’s Brexit path, and confirmed that the EU will approach Brexit negotiations in a constructive way.
·         The author mentions Select Milano which is trying to help Italy intercept some of the financial assets that will have to leave London as a result of Brexit. It will begin its London road show in March wherein it will hold meetings with the financial community in London, focusing on the benefits of transferring to Milan given its existing ties with the LSE Group.
·         Bepi Pezzulli stated that places like Paris do not hold any competitive advantages over Milan given issues like relative tax burden and security. A move to Frankfurt would only confirm the rhetoric of populists who trumpet the idea that the EU centres too firmly on Germany. Milan, however, must make reforms like the abolition of the Tobin Tax to increase competitiveness.
·         The Italian Government is also making its own moves to take advantage of Brexit, with the recent announcement by Finance Committee Chair, Maurizio Bernardo, of the formation of a task force of experts which will work to support all initiatives in favour of accepting the transfer of business from the UK post-Brexit, focusing on the European Medicines Agency.
Milan and Brexit:
Belfast Telegraph
By Colm Kelpie
8 February 2017
Almost one-fifth of wholesale finance activity in the European Union could take place in the Republic of Ireland post-Brexit, a Brussels-based think tank has projected.
Bruegel said 2% of EU’s wholesale activity was currently in the Republic, versus 90% in the UK, but this could increase to 15% or 18% once the UK leaves.
The report estimates that around €1.8trn of UK banking assets will be on the move post-Brexit, with about 35% of London wholesale banking currently relating to clients in the other 27 EU member states.
That varies from about one-fifth for UK-headquartered banks, to one-third for US and half for EU banks.
“Thus, about €1.8trn, or 17%, of all UK banking assets might be on the move as a direct consequence of Brexit,” the report said.
It also claimed that about 10,000 banking jobs and 20,000 related professional services roles could be up for grabs by other EU capitals, with Dublin, Frankfurt, Paris and Amsterdam among the cities listed. However, other cities including Brussels, Luxembourg, Warsaw, Milan and Vienna could also feature.
The report presents two scenarios for post-Brexit capital markets services – an integrated wholesale market, or one that fragments along national lines.
“In both scenarios, the UK’s share of the European wholesale market drops from 90% to 60% because of Brexit,” the report said.
“The starting point is that financial firms with a MiFID passport can serve EU27 clients from anywhere in the EU27, just as they currently do from London.”
The report, co-authored by Andre Sapir, Dirk Schoenmaker and Nicolas Veron, said that in the fragmented case, Frankfurt, which hosts the biggest European operations of the US investment banks outside London and is home to the European Central Bank, would become the main centre, with 45% of the EU27 wholesale market.
Paris, home to the European Securities and Markets Authority and several large banks, may cover 20%, and Dublin and Amsterdam might cover 15% and 10% .
In scenarios that assume integration, there is less need for all activities in one location. In this case, 35% of wholesale finance would be in Frankfurt, and 12 to 20% each in Amsterdam and Paris, with Dublin getting 18%.
The report came a day after a French politician warned Britain would lose crucial EU financial access rights during a visit to London to poach bankers and financiers. Valerie Pecresse, president of Ile-de-France, said Brexit is opening up “fierce competition” between Europe’s capitals to take business from the City.
Financial Times
By Alex Barker and Paul McClean
8 February 2017
Denmark has joined the crowded field vying to give a post-Brexit home to the European Medicines Agency, a London-based authority that is one of the regulatory jewels of the EU.
Copenhagen’s candidacy launch on Wednesday comes in the wake of Amsterdam, Milan, Stockholm, Barcelona and Dublin. The pan-European contest for the regulator may eventually involve up to 20 applicants in total.
The process to find a new host for London’s two big EU agencies — the EMA and the European Banking Authority — is expected to bring out primal competitive spirits among the EU-27, in a tussle that Brexit negotiators fear will be hard to contain.
With almost 1,000 employees, the EMA not only brings a highly-educated workforce to its new home but also acts as a hub for the pharmaceuticals industry and related research activities. Industry figures fear a mishandled move could slow down the drug approval process in Europe and the UK.
As he lauded Copenhagen’s credentials and its established pharma industry, Anders Samuelsen, the Danish foreign minister, admitted “there is no doubt that the competition is tough”.
Some countries are still preparing applications, or remain locked in domestic disputes over which city to propose. Others are honing campaigns to woo industry and elbow out rivals in the diplomatic race.
“Forget about solidarity, this will be messy, ugly, everyone for themselves,” said one European diplomat preparing an EMA bid. The testy and unsuccessful negotiations between Sweden and Denmark over the idea of pitching Malmo — in a novel joint-bid linked by the Oresund bridge — gives a flavour of the diplomatic passions that may be unleashed by the race.
Expressions of potential interest have been noted from Belgium, France, Germany, Luxembourg, Finland, Cyprus, Malta, Greece, Portugal, Slovenia, Slovakia, Poland and Hungary. Only the Czech Republic and Estonia confirmed to the Financial Times that they would not be applying; Prague has decided to focus on its bid for the EBA.
Ultimately a decision on where agencies will be located requires unanimity among the EU member states, a legal requirement that could prove tricky while Britain remains within the bloc. The European Commission and the council of member states have yet to give any indication on how quickly they will propose to move agencies.
“It goes without saying that EMA needs clarity about its future as soon as possible,” said Bert Koenders, the Dutch foreign minister, at Amsterdam’s launch. “Its work is too important to everyone in Europe to postpone the matter until after the Brexit negotiations.”
So far most bids to provide a new seat for the EMA are focusing on quality of life and general appeal, the presence of a substantial pharmaceutical industry, infrastructure, housing, schools, transport links and a nearby university network.
Some eastern member states are noting summit conclusions from European leaders that suggested that new seats of agencies should be “primarily located” in EU states that joined after 2004, or which do not already have an agency. Croatia, Bulgaria, Cyprus, Romania and Slovakia host no EU agencies.
The EMA oversees medicine regulation within the EU and evaluates applications for medicines to receive marketing authorisation across the bloc. It has been based in London since it was founded in 1995.
Analysts say that along with highly-qualified talent, the EMA draws in an ecosystem of pharmaceutical businesses to the city. “If a US company was looking to locate a European headquarters somewhere, having it in proximity to the EMA makes perfect sense,” says one pharma consultant. “There are whole areas of subject discussions on policy areas that take place, and a lot of that is focused on the EMA.”
Some drugs company bosses have spoken out against the move, with Andrew Witty, chief executive of GlaxoSmithKline, warning it would cause “tremendous disruption” to the industry.
By Riccardo Fruscalzo, Hogan Lovells
9 February 2017
The EU Medicines Agency (EMA), the most sought after EU regulator, is looking for a new home. 900 jobs will move from London to an EU Member State when Brexit is complete. In a series of blog posts, our European life science and healthcare colleagues pitch their home country as the new location for the EMA. In our first post, Riccardo Fruscalzo, a Counsel based in our Milan offices, argues the case for Italy.
Why should the EMA relocate to Italy? Let’s put aside clichés for a moment – we all know that the EMA officers would simply love the excellent food, the friendly atmosphere and the pleasant weather (much better than in London). Indeed, they would probably find that their entire stint in office is not long enough to discover all the beauties of our country! That goes without saying.
What most people – even Italians! – do not know is that the Italian pharmaceutical industry is a big Pharma player in Europe, not only in terms of its manufacturing abilities but also its professional skill. Italy is indeed the second largest manufacturer of medicinal products in Europe (Germany being the first), with approximately: 200 companies active in the field; 63,500 professionals employed in the industry; €2.6 billion of investment in 2015 (1.4 in R&S and 1.2 in manufacturing); and €30 billion of manufacturing (73% of which was exported). Making all this possible are the Italian scientists, who, according to the OECD, published the third greatest number of scientific articles per unit of GERD (gross domestic expenditure on R&D), behind UK and Canada.
The Italian government is taking the candidature of Milan as a possible venue for the EMA very seriously, working closely with the municipal and regional authorities. Milan is Italy’s most important economic centre and is one of the main pharmaceutical districts in Europe. The city is ready to play this role – it has modern and well equipped headquarters, several universities, easy travel connections with the rest of Europe, and international schools and urban facilities that meet the highest European standards – as EXPO, the universal exposition hosted by Milan in 2015, has already demonstrated.
Besides, Italy is the only big European country, and founder of the European Union, that is not hosting any other important European institution in its territory, except for the European Food Safety Authority (EFSA). Indeed, the potential synergies of EMA and EFSA (as the U.S. Food and Drug Administration) are evident both in terms of quality of the service and reduction.
Corriere della Sera
By Isidoro Trovato
13 February 2017
Summary from Italian:
·         Marcella Caradonna, new chair of the Order of Accountants of Milan, confirmed that promoting Milan as a post-Brexit alternative to London is one of her priorities during her tenure. She noted that the city is working to establish connections with multinationals, and explaining to foreign investors how to overcome barriers to entry in the country. She noted that it is an international city by nature, and has a specialisation in finance.
9 February 2017
Summary from Italian:
·         Italy is working to bring the European Medicines Agency to Milan; this would be a big win given its 900 employees, rich events programme and budget of €300 million. An anonymous diplomatic source told the Financial Times that the race to win the institution would be fierce and “every man for himself”.
·         Given that the former Expo area is not yet ready for move-in, an alternative locale at Sesto San Giovanni has been proposed as the potential future home of the EMA. The potential transfer of the EMA would bring to the city lecturers, researchers and lobbyists, making it a true pharmaceutical hub.
·         Other candidate cities include Barcelona (one of the top contenders alongside Milan), Copenhagen, Amsterdam and Dublin. However, it is also possible that one of the EU countries that does not yet host an agency, including Bulgaria, Cyprus, Croatia, Romania and Slovakia, may also become the EMA home as well.
Europe and Brexit:
By Josh Lowe
8 February 2017
Brexit could threaten 30,000 jobs in London’s world-class finance sector, according to a Brussels-based think tank.
Bruegel, a policy shop influential within the EU institutions, estimates in a report published Wednesday that about 10,000 banking roles and 18,000 to 20,000 professional roles, such as those in consulting or law, could move to other EU nations after Brexit.
The assumption is based on the idea that U.K. banks will lose their “passport” to operate across the EU, so is dependent on the outcome of Brexit negotiations. Overall, the report said, about 17 percent of all U.K. banking assets might be on the move as a result of Brexit.
The report said that the financial services market across the 27 other EU countries could either end up highly fragmented between different national markets, or become more integrated.
Which of these models EU countries adopt affects the outcome for different nations. But either outcome places Frankfurt in Germany, Amsterdam in the Netherlands, Paris in France and Dublin in Ireland as the biggest winners.
Where the U.K. currently accounts for about 90 percent of the European market in financial services, Bruegel estimates this will drop to about 60 percent, with Germany growing to between 14 and 18 percent, France to 8 percent, Ireland to between 6-7 percent, and the Netherlands to between 4-5 percent.
Britain is set to trigger the Article 50 EU exit mechanism in March, meaning that the country is likely to formally leave the EU in early 2019.
By Josie Cox
10 February 2017
One of Germany’s top banking regulators has warned that London could lose its status as “gateway to Europe” for the banking sector after Britain quits the European trading bloc.
Andreas Dombret, who is an executive board member for the Bundesbank – Germany’s central bank – told a private meeting of German businesses and banks earlier this week in Frankfurt that even if banking rules were “equivalent” between the UK and the rest of the EU, that was still “miles away from [Britain having] access to the single market”.
“The current model of using London as a gateway to Europe is likely to end,” Mr Dombret reportedly said.
Mr Dombret reportedly made it clear that he did not support a “confrontational approach” to future relations between the UK’s substantial financial services sector and the EU, but that there was “intense uncertainty” about how Brexit negotiations would pan out.
He said that Brexit fits into a trend towards “renationalisation” which he said he strongly believes “negatively affects the wellbeing of us all”.
“We should therefore invest all our efforts in containing these trends,” the BBC reported that Mr Dombret said.
Mr Dombret, who was born in the US to German parents, is a former banker who held positions at Deutsche Bank, JPMorgan, Rothschild and Bank of America before joining the Bundesbank in 2010.
Earlier this week the European Parliament’s lead Brexit negotiator said that the EU needs to reform or it risks disappearing completely. Guy Verhofstadt said that there are multiple sources of pressure on the bloc.
“If we look to the pressure on the European Union at the moment… [President Donald Trump] is bidding on the designation of the European Union and also Vladimir Putin who wants to divide the European Union,” he said.
“Then there’s also the threat of jihadism and then internally we have enormous pressure by nationalists, populists, the whole question of Brexit, so it’s an existential moment for the European Union,” he added. He said that it is “now the time to reform, otherwise it could disappear”.
By David Campbell
7 February 2017
Financial companies considering a relocation to mainland Europe or Ireland to avoid a Brexit loss of market access face an average moving cost of £50,000 per employee according to a specialist analysis.
Tech and management consultancy Synechron estimated the overall price tag for a bank hoping to relocate 1,000 staff members at around £23 million in average moving and hiring costs.
Property costs would add a further average £20 million, with a 20% contingency fund bringing the overall financial burden up to £50 million.
Synechron business consultant Tim Cuddeford said: ‘Following the UK’s decision to leave the European Union, many banks and financial services firms are having to consider where best to locate certain parts of their workforce.
‘Financial passporting is vital to the work many banks undertake across Europe and they will have to think carefully about which city within the EU their interests and their clients’ interests will be best served.
‘Our calculations show that it could cost these firms on average £50,000 per employee to relocate parts of their workforce out of the UK, perhaps to financial centres such as Amsterdam, Dublin, Paris and Frankfurt.
‘Other cities may be just as competitive and worth considering as long as there is access to similar talent pool and infrastructure.’
UK-based banking operations have begun to consider their options in earnest recently, as the government has made clear that it expects to take the UK out of the single market.
PwC head of Brexit consultancy Andrew Gray told the Guardian last month that he expects to see the volume of decisions begin to mount this month.
Lobby group CityUK by PwC said it expects the total workforce in the City of London to shrink by 100,000 between now and 2020.
BQ Live
By Bryce Wilcock
8 February 2017
The Mayor of London Sadiq Khan has announced he will visit five major European cities next month to declare that the capital ‘is open for business.’
Shortly after the government is expected to trigger Article 50 and begin formal negotiations with the EU, the mayor will visit Berlin, Brussels, Paris, Madrid and Warsaw over six days in March to strengthen the historic economic, business and cultural ties London shares with its European neighbours.
Khan will use the trip to make it clear that London continues to welcome people from across the world to work, study or visit. His ‘London Is Open’ programme is expected to include meetings with senior politicians, city leaders and business leaders.
Talks are expected to cover London’s needs from the Brexit negotiations and key issues that the capitals have in common with London, including air quality, the night-time economy and the need for greater social integration.
There will also be discussions of the importance of joint security work in the aftermath of Brexit, to help keep London and Europe safe from terrorist attacks.
In Brussels, he will meet with senior EU representatives and deliver a keynote speech, in which he is expected to lay out London’s requirements from the Brexit negotiations and argue that London and other European cities will need to work closer together than ever before in the aftermath of Brexit.
He will tell senior business leaders he will meet on the trip that, despite Brexit, London will remain the best city in the world in which to do business.
The mayor will point out that the flow of ideas and talent into London from overseas has always been the key to the cities’ success, and say that not only are visitors welcome in London but they are celebrated for the many contributions they make.
Khan said: “I want to take the message directly to Europe that London will always remain open to engaging, trading and doing business with our friends across Europe.
“Our connections on the continent are more important than ever before and, regardless of Brexit, we will continue to work closely together for our mutual benefit.
“I promised to be the most pro-business mayor this city has ever seen and it is vital that we demonstrate to our partners overseas that despite Brexit we remain open to business, investment, talent and ideas.
“London will remain the best place in the world to do business and our collaboration with other major European cities will not cease.”
Sadiq will confirm his plan to travel to Europe while speaking at an event for participants in the Mayor’s International Business Programme – an initiative to help London-based companies with growth and export opportunities overseas.
Representatives of companies on the programme will accompany the mayor to Berlin, Paris and Madrid. He will help some of London’s fastest-growing businesses from the life sciences, technology and urban sectors to drum up new trade opportunities.
Last September the mayor led a trade delegation of 30 fast-growing companies to the United States to strengthen business links between London, Chicago and New York.
The start-ups accompanying the mayor met with investors, business leaders and entrepreneurs, generating investment and trade opportunities for London.
As a direct consequence of the visit several of those companies are now negotiating deals with major US clients and one London business has already doubled its US revenue following the trip.
Khan concluded: “The companies which have taken part in my Business Programme are globally focused and outward looking and have helped forge new trade deals, new partnerships and links with cities overseas.
“By scaling up their businesses across international markets they show exactly how London is open, innovative and at the forefront of global business, tech and finance.
“I am determined to continue to help them make inroads into new markets and look forward to working with them across Europe in March.”
6 February 2017
Whether Britain accepts the authority of the European Court of Justice will be a key factor when the European Central Bank decides if the clearing of euros can remain in London after Brexit, ECB President Mario Draghi said on Monday.
“It’s too early to take a firm stance on the regulatory framework that should be established once the UK leaves the EU,” Draghi told a European Parliament committee.
“What is important is that we don’t step back on the single market. And to be part of the single market, you have to be subject to the European Court of Justice. We’ll have to look carefully at that.”
The ECB has a say in approving a planned merger between the London Stock Exchange (LSE.L) and Deutsche Boerse (DB1Gn.DE), with the location of the headquarters and the clearing operations seen as a possible sticking point.
The Guardian
By Dan Roberts
6 February 2017
Paris is targeting the “tens of thousands” of bankers its hopes will be driven out of London by Brexit, dangling the promise of tax breaks and flexible redundancy rules to complement the French capital’s cultural charms.
In one of the most aggressive marketing initiatives yet, a delegation of political and business leaders from France met representatives of about 80 banks and fund managers for a summit on Monday on the 37th floor of the Shard in central London.
Since the referendum Parisian officials have written to 4,000 UK-based companies, and they report a “growing stream of enquiries” to an English-speaking hotline that offers advice on schooling, housing and a new expat tax regime.
The French officials predict 10,000 London employees may directly relocate to Paris when their firms lose passporting rights to sell financial products in Europe, with associated employment rising by two to three times that.
“Brexit is a long-term process,” said Valérie Pécresse, president of Ile-de-France region, which includes Paris. “The move will come slowly, so we just don’t know yet [how many will come].”
She claimed a survey had suggested “tens of thousands of jobs” would leave London overall, but added: “It will depend on the strategy of the firms and how hard the Brexit is.”
Pécresse rejected suggestions that Paris, therefore, had an incentive to make sure there was only minimal agreement with Britain for financial market access after Brexit.
“It’s not a question of punishing Britain for its vote,” she said. “It’s a question of trying to keep a strong European Union. If we want to keep a strong EU, it means that people who vote out cannot have it both ways: they cannot have all of the advantages and none of the duties.”
Gérard Mestrallet, chair of the organising group Paris Europlace, said: “We are not here to force financial institutions to leave London. That would be their decision. But if they decide to move some of their activities after Brexit, our message is: come to Paris.”
Despite the imposing location of the event, overlooking the City of London, much of the more overt competition was directed at other European cities also looking to secure a share of the anticipated departures.
“Of course we all regretted the Brexit vote, but this vote opened a period of fierce competition between the main cities of continental Europe,” said Pécresse. “When was the last time you took your partner off for a weekend in Frankfurt?” she challenged her German counterparts.
Employers were told that French labour laws were less strict than was commonly perceived and were presented with a series of charts boasting of lower severance payments than in Britain and redundancy totals in line with Germany.
The organisers refused to release the names of any firms, other than HSBC, who were discussing moving jobs to Paris, saying many were waiting until after the French presidential election to firm up their decisions and go public.
They also rejected the suggestion that the focus on low taxes for bankers was out of step with the political mood or would lead to a race to the bottom with the UK.
“It will be very difficult for the British government to make London like Panama,” said Jean-Louis Missika, a deputy mayor of Paris, in response to recent threats by the British chancellor, Phillip Hammond.
“We are not running that race,” added Pécresse. “ In France we have public services. We want normal taxes, not dumping.”
Nonetheless, the pack of slides given to attendees of the meeting was heavily focused on addressing “misconceptions” about French taxes and labour laws.
“Brexit is an earthquake,” Missika said. “It will reshape the economic and financial landscape of Europe.
“We are not here to steal business from London. We are here to reorganise the financial industry together. We are here to build bridges.”
Mark Boleat, the policy chairman at the City of London Corporation, said he would expect cities such as Paris to compete for jobs, but added: “I am confident that the depth of talent here, our attractiveness as a place to work and live, and assets like English rule of law, language and our regulatory landscape will mean we remain the number one global financial centre.”
By Ambrose Evans-Pritchard
9 February 2017
Two of the biggest global banks have told French politicians in brutally clear language that Paris has almost no chance of capturing serious business from the City of London without radical reform of the country’s labour code.
A special Brexit panel in the French Senate revealed just how difficult it will be for Paris to become Europe’s pre-eminent financial centre once Britain leaves the EU. Any migration of business is more likely to go to Dublin, Frankfurt, or even to New York.
Jean-Frédéric de Leusse, head of UBS in France, said French law does not offer major banks the complete flexibility they need in the fast-moving world of high finance and complex trading.
“As the saying goes, it takes three days to fire somebody in London, three months in Switzerland, and three years in Paris. It may be an exaggeration, but it is probably quite close to reality,” he said.
Mr de Leusse said UBS employs far more French citizens in London than it does in Paris, and that is unlikely to change quickly.
Rene Proglio from Morgan Stanley said those making the key decisions at corporate headquarters in New York could not care a hoot about the lifestyle or happiness of their staff. It is futile making a pitch that Paris is a nice place to live .
“That is not their concern, so don’t get carried away with a humanist philosophy. Like it or not, their only objective is to defend the interests of the shareholders,” he said.
Mr Proglio said the crucial issue for banks is the level of corporate taxation and the overall cost of labour. France is simply not competitive by this metric. “Employers’ social charges are colossal. It is a handicap, and the gap with Frankfurt is a very big problem,” he said.
Marie-Anne Barbat-Layani, head of the French banking federation (FBF), said Paris has strong cards to play in the post-Brexit race. Four of the nine top banks in the eurozone are French and the country’s fund management industry is the largest in the currency bloc.
But draconian labour laws are anathema to foreign investors. Once you take the plunge on hiring extra staff, you are effectively trapped. “Employers don’t have any margin for error. They can’t manage their head-count,” she said.
The bankers called for root-and-branch reform of the French labour code, which has tripled to 3,000 pages since 1985. The labyrinthine legal system has 400,000 business norms and regulations, with 360 separate taxes, some dating back before the French Revolution.
The notorious French Labour Code has been getting fatter and fatterStephane Boujnah, president of Euronext, told lawmakers that they need to be more sensitive to the “devastating impact” of populist Left-wing measures such as the 75pc tax (since withdrawn) or the Tobin tax on financial transactions.
Mr Boujnah said the Tobin tax was “absurd, ideological, and yielded nothing” . The authors of the legislation failed to heed the disastrous lessons from Sweden in the 1990s, when a variant of the tax proved impossible to collect and wiped out parts of the Swedish financial industry.
He also had a severe warning for Britain, calling Brexit a fundamental rupture that had “started on the wrong foot” and would have enormous consequences for London.
Mr Boujnah said the rest of the EU would no longer tolerate the anomaly of an offshore financial centre based in London that services the euro, now that the British people had chosen to pull out of Europe’s “shared federal destiny”. The tone of anger and bitterness in his voice was unmistakable, a reminder of how much tact and delicacy will be required from UK leaders as they handle Brexit talks.
The evidence so far is that ‘refugees’ from London are looking at Frankfurt as a possible new hub in Europe once Britain loses ‘passporting’ rights in the EU services market, with Dublin playing a support role in certain niche operations.
Frankfurt may win the post-Brexit prize in the end, though the German regulators are not sure they want itA ‘Brexit Workshop’ in Frankfurt held by the German regulator BaFin earlier this month was heavily attended by bankers from London looking for a new foothold.
However, the banks were warned that German licences would be hard to secure. Foreign players would not be able to waltz into Frankfurt on their own minimalist terms, playing off one financial centre against another in regulatory arbitrage. The operations of any subsidiary based in Germany would have to be managed in Germany itself.
BaFin’s chief concern is to safeguard the stability of the German financial system. “Foreign banks are welcome here, but it is not good enough just to nail in a brass-plate and set up a sales unit,” said Peter Lutz, BaFin’s chief of banking supervision.
Dr Lutz said there are no grounds for gloating over Brexit. The ructions to follow are likely to convulse Germany and “dramatically change” the job of the German regulator. “Brexit is a bitter blow for European unification, but BaFin cannot change the situation and we have to deal with it as pragmatically as we can,” he said.
By Lana Clements
7 February 2017
Politicians from Paris yesterday held an upmarket event in London to showcase the French capital to Britain’s banking elite.
During the reception, Valerie Pecresse, president of the Paris region, launched a withering attack on Germany’s financial centre.
She asked: “When was the last time you thought of taking your partner for a nice weekend in Frankfurt?”
It comes just a week after German regulators put on an event for bankers to outline how firms could shift operations from London to its financial district.
Ms Pecresse also told yesterday’s audience that two new international schools have opened in Paris since the Brexit vote, and there are plans for an another two.
Despite the brazen event held in London’s impressive Shard building, the vice-mayor for the City of Paris, Jean-Louis Missike, said: “We are not here to steal business from London.”
Officials admitted they would not be able to overtake London’s role as the region’s global financial centre, but hoped that some jobs which leave the UK during the Brexit would come to Paris.
A group aimed at promoting Frankfurt, has predicted that 10,000 jobs will move from London to Frankfurt over five years following Britain’s departure from the EU.
JP Morgan and HSBC have said that parts of their businesses could be moved in response to the divorce from the union.
Prime Minister Theresa May recently met with the bosses of several leading investment banks to hear out their Brexit concerns.
She said her idea of a “global Britain” would keep posts in the UK.
6 February 2017
Valerie Pecresse, an ally of French presidential candidate Francois Fillon and current French assembly member, claimed the UK couldn’t expect to enjoy the “advantages” of the European Union without undertaking the “duties”.
She urged global banks to ditch the City of London because the “markets are in Europe” and Brexit might mean an end to the financial passporting rights currently enjoyed in Britain.
Speaking on BBC Radio 4’s Today programme, Nick Robinson challenged her on the claims and suggested Brussels may gang up on the UK because of the referendum result.
“I think in reality people will move for one of two reasons,” he said.
“You will either bribe them to move – you’ll give them big tax breaks and the French government has started to do some of that – or you will change the rules of the EU to prevent London doing business, certainly, around some European sectors.”
Responding to the allegations, Ms Pecresse said: “Let me put it differently, you chose to be outside of the European Union.
“When you have the advantages you also have to the duties as well, and if you don’t want the duties of the European Union, then you cannot have all of the advantages.”
As the exchange continued, Robinson added: “You’re being diplomatic, you’re being kind to Britain – you’re here to take our jobs and our business, you’re a French politician and it would be odd if you weren’t.
“Be less polite, why should people get out of London?”
Ms Pecresse replied: “Because the market is in Europe, the clients are in Europe, the tech is in Paris and the quality of life is in Paris.”
She said the EU exit had triggered huge competition for European cities to try and take business from London.
However, the French politician’s claims could look slightly premature after the Bank of America has predicted an optimistic outlook for the pound.
A spokesperson for the Bank said: “The markets have essentially been priced for a ‘hard’ Brexit already.”
And top banking strategists Athanasios Vamvakidis and Kamal Sharma predicted the end of Britain’s financial “panic” over Brexit.
They said: “The pound looks cheap. We think the start of the countdown to Brexit may prove to be the low point.
“We have no doubt that many political hurdles lay ahead for the pound but we doubt that the markets will be in a perpetual state of panic over everything Brexit-related headline.”
Belfast Telegraph
8 February 2017
France’s attempt to woo big City-based banks to Paris following Brexit has got off to a stuttering start after it emerged that JP Morgan did not attend a key summit held at London’s Shard.
Banking sources told the Press Association that despite being invited, not a single JP Morgan representative attended the event, which was aimed at luring London-based financial firms to the French capital.
An invitation to attend a separate meeting with a French delegation of business leaders and politicians on the sidelines of Monday’s event was also rejected, with organisers being told that JP Morgan representatives were not in London that day.
It meant the US banking giant was missing in action at Monday’s summit, which saw more than 60 representatives from UK-based banks, fund managers and insurance firms descend on the London’s Shard skyscraper to hear about the benefits of choosing Paris as their post-Brexit destination.
News of JP Morgan’s absence represents a setback to French hopes of grabbing a slice of Britain’s financial services sector pie.
The Wall Street lender did, however, send staff from its German office to an invite-only event held by state regulators in Frankfurt at the end of January.
Germany’s financial watchdog Bafin hosted around 50 representatives from more than 20 banks, including JP Morgan and Goldman Sachs, for a workshop that set out guidelines for setting up shop in Frankfurt following Brexit.
JP Morgan chie f executive Jamie Dimon has said around 4,000 of its 16,000 UK staff in London could be shifted out of Britain to protect its European business after Brexit, though a potential location has yet to be revealed.
Mr Dimon was among a number of Wall Street bosses that met with Prime Minister Theresa May on the sidelines of the World Economic Forum’s annual meeting in Davos, Switzerland, last month, shortly after the Government outlined plans to scrap access to the EU’s single market.
Experts have speculated that rival financial centres such as Dublin, Frankfurt and Paris could end up siphoning off some of the City’s business as they court financial services firms ahead of Brexit.
HSBC has already confirmed that it is on course to move 1,000 jobs from its London office to France, where it already has a full service universal bank after buying up Credit Commercial de France in 2002.
A hard Brexit would effectively remove passporting rights that allow UK-based financial services to trade across the bloc without needing to apply for licenses in each member state.
It has raised concerns among City firms who rely on EU business, including insurance market Lloyd’s of London, which is searching for a European hub to host a portion of its business in light of Brexit.
Sources close to Lloyd’s told the Press Association that Luxembourg has emerged as the frontrunner on a short list of five sites – including Malta, Dublin, Frankfurt and Paris – for a potential EU subsidiary.
By Dr Matthew Partridge
7 February 2017
One of the factors that will determine whether Brexit is a success or not is the effect it has on Britain’s financial services industry, which provides a huge amount of tax revenue and around 10% of GDP.
Critics warn that restrictions on selling products and services to the rest of Europe will lead to companies relocating abroad, with knock-on effects on other industries. However, others argue that even if the City does face barriers, firms will ultimately choose to stay put. As well as the language barrier, continental cities such as Frankfurt and Paris are perceived as less business-friendly, with much higher rates of personal taxation (a key factor for high-earning bankers and lawyers).
However, the challenge from Dublin is much harder to dismiss. Even before Britain voted to leave, the Irish capital’s location, low rates of taxation and openness to foreign investment meant that it was rapidly turning into a major European financial centre.
One person who has been closely monitoring the situation from the Irish side is Mary Rose Burke, CEO of Dublin’s Chamber of Commerce. Before she became CEO, Burke worked for Ibec, Ireland’s main business federation, giving her an insight into what Irish business as a whole thinks about how things are developing.
Burke believes that “there has been growing activity since the June referendum”, with London firms talking to commercial property companies and office developers about relocating. Initially this just consisted of “companies making brief trips [to Dublin] to scope out opportunities”. However, in the past few weeks, “we’ve had second visits from people who initially expressed an interest” and these have involved “key decision makers”, again indicating that firms are truly serious about this. While companies are still “being discreet” about the fact that they are considering moving, “things are definitely going on, albeit quietly”.
The two types of business keen to move
While all parts of the financial sector are affected, Burke thinks that two types of firms are particularly eager to shift their operations. Insurance companies are very worried that the potential loss of “passporting” rights will make it much more difficult to do business with the continent.
Law firms are also concerned about their ability to bid for legal work in Europe after Britain formally leaves the EU. As a result, they are looking to get around this by shifting at least part of their operations to Ireland, which is only a short flight away (or in the case of Belfast, a 90-minute car journey).
Burke emphasises that, whatever happens, Ireland and the UK will maintain warm relations, with strong cultural and social links. However, this isn’t stopping both Dublin and Ireland as a whole from “making sure that the world knows that it is open for business”.
Indeed, Burke expects that any turn towards protectionism in Britain and the US will lead to global firms searching for a country that is more outward-looking. To help with any short-run disruption, Ireland has significantly boosted funding for its two main development agencies, Enterprise Ireland (which helps Irish exporters) and IDA Ireland (which gives foreign firms incentives to come to Ireland).
At the moment one of the big issues is how Brexit will affect the longstanding Common Travel Area between Ireland and the UK. This arrangement, which dates from 1923, essentially allows free movement for Irish and UK nationals between the two countries without any border controls. There have been worries that it could fall foul of both EU law and Britain’s desire to restrict immigration. However, Burke is confident that the agreement will continue in some form, as both the UK government and the other EU countries “accept that Ireland has a unique position”, which needs to be respected.
One idea that is very definitely not on the cards is any prospect of “Irexit” – Ireland deciding to follow the UK out of the EU. While a few fringe figures, including a retired diplomat, have endorsed the idea, Burke sees such talk as “kite flying” and “opportunistic”, from people with their own agendas. She certainly “hasn’t seen anything that would support such sentiments”. Indeed, she firmly believes that the Irish population is “much more supportive of the EU than the UK”, with general agreement that the Republic has “benefited greatly from EU membership”.
Financial Times
By Hannah Roberts
8 February 2017
For decades Brussels has been talked down as a drab, soulless city, populated by humourless bureaucrats. It may not have the majestic landmarks of other European cities such as Paris and Rome, or Berlin’s edginess. Yet thanks to its relatively low-cost property prices and high quality of life, Brussels is attracting more creative types and start-ups, and beginning to shake off its reputation as the grey man of Europe.
As the dust from the UK’s Brexit referendum continues to swirl, the de facto capital of the EU is one of several cities hoping to benefit, as institutions shift employees from London to cities with a future inside the union. The city is in a strong position to attract talent, according to Silvia Galli, founder of co-working space Bon Jour Bruxelles.
“Housing is affordable, and [Brussels] is not that big so you can get almost everywhere by foot or bicycle,” she says. “It’s got a lot to offer culturally and everything you would expect from a capital city. Some people come for three months and stay forever.”
Until five years ago Eurocrats were the only international tribe in town, she says, but now start-ups are arriving from North America, Singapore and Africa. Today, Brussels is “not boring at all”, she insists, “but maybe it hasn’t promoted itself as it should have done”.
While Londoners are yet to arrive en masse, Brussels is already popular with Parisians seeking value — and space — for their money. David Sdika started another co-working space in the city, Factory Forty, after relocating from the French capital nine years ago. “When you have kids, you would need to be a millionaire to live in Paris — and London is even worse.” Brussels is “easy to live in”, he adds, with larger apartments and good schools.
There are already signs that London-based companies could set up shop in Brussels. Sdika has received inquiries from several start-ups since the vote. Crucially for international investors, it is well-located. “Geographically it’s the centre of western Europe. And everyone speaks English, unlike in Paris.”
Those investors that do come will find it affordable by comparison. The city’s property market has been relatively shielded from bubbles due to a high purchase tax of 12.5 per cent, which deters rapid buying and selling. But since a coalition government was formed in 2014, the market has slowed, with some international buyers postponing decisions because of uncertainty over tax, says Philippe Rosy of Engel & Völkers.
Prices have since risen between 1 and 4 per cent a year, he says, although for some city-centre apartments, price rises have reached 5 per cent.
For a two-bedroom apartment in Ixelles/Louise, the smartest area, you can expect to pay about €3,500 per sq metre, compared with €8,000 to €11,000 per sq metre in central Paris or €18,000 in London’s W1 postcode.
Engel & Völkers is marketing a seven-bedroom, early 20th-century mansion on the prestigious Avenue Molière for €3.5m. Nearby Sotheby’s International Realty is selling a seven-bedroom house with a pool for €4.5m.
Families may prefer to buy farther out in the leafy communes of Uccle or Woluwe-Saint-Pierre, which are closer to some of the city’s international schools and best restaurants. A 1930s detached villa with five bedrooms and a 15-acre garden in Uccle is on sale for €2.65m through Engel & Völkers.
While Brussels has no shortage of elegant properties to tempt London bankers, some may be put off by the perceived threat of terrorism. And City firms may not view it as a financial hub. “It’s not like Amsterdam or Paris which have a tradition of finance,” says Rosy. Brussels came 62nd in the Global Financial Centres Index, which ranks the competitiveness of financial centres, published in September 2016. London was number one.
Yet the city is likely to benefit, in the short term at least, from a growing demand for lobbyists following the Brexit vote, says Karl Brophy, chief executive of Red Flag, an international lobbying and consultancy company, which is planning to double its staff numbers in the city. “A lot of countries which have previously taken positions similar to that of the UK [in the EU] now have to actually fight for themselves,” says Brophy. “So, corporations and trade associations that used to not spend in Brussels — because the Brits could be relied upon to fight the good fight — now face having to resource up.”
In the longer term, the picture could be somewhat bleaker, says Rosy. Rather than boost its fortunes, Brexit has actually put Brussels at risk, by threatening the EU itself, he suggests. “It’s weakened Europe and there is now an increased chance that the EU could collapse. If the EU collapses, Brussels will collapse.”
This is an unlikely scenario, he acknowledges, but, should the worst happen, many in Brussels may long for the dull days of yore.
City assets
Accessibility Brussels has direct flights to most European capitals and New York. It is 80 minutes to Paris by high-speed train and less than two hours to London
Regulation Belgium was ranked 42nd in the World Bank’s 2017 “ease of doing business” ranking
Existing infrastructure As home to the EU and Nato headquarters, Brussels has world-class infrastructure
Residential property The Neo project will redevelop an 18-hectare site in the neglected Heysel Plateau area into a shopping and leisure hub with a convention centre and sports grounds, as well as more than 700 new homes
Buying guide
What you can buy for . . .
€500,000 A two-bedroom apartment in the central Louise quarter
€2.5m A seven-bedroom villa in Uccle
€5m An architect-designed villa with a pool in Woluwe-Saint-Pierre
Relocate Magazine
By David Sapsted
8 February 2017
The global insurance services provider was originally looking at picking a post-Brexit subsidiary from a shortlist of five: Luxembourg, Malta, Dublin, Frankfurt and Paris. But last month, chief executive Inga Beale said Malta had been ruled out.
Faced with the possibility of losing crucial licensing rights when Britain left the EU, Ms Beale said, “We’re going to be setting up a subsidiary somewhere else in the EU – a country that we hope will remain in the EU – and that is how we are going to provide seamless coverage to our customers.”
Luxembourg ‘a favourite’
Lloyd’s plans to make a final decision by the end of March but, according to reports, Luxembourg – a lynchpin of European unity – emerged as favourite during a recent board meeting in London.
The Financial Times commented, “Lawyers say that establishing an EU base could be more difficult for Lloyd’s than for more conventional insurers because it is a market consisting of many underwriters, rather than a company.
“Many of the insurers that operate at Lloyd’s are also looking for alternative bases in the EU. A large number of them are leaning towards Dublin because of its language, legal system and proximity to London.”
A Lloyd’s spokesman declined to comment on the likelihood of Luxembourg being chosen. “We are continuing to work through the process of establishing a subsidiary in the European Union and no decision has been taken on where that will be,” he said.
‘Seamless access to the EU’
“We want to be able to provide our customers with a seamless access to the European Union and vice versa – as we know businesses in Europe will want to be able to access the Lloyd’s market.”
Unlike some of its rivals, Luxembourg has adopted a fairly low-key approach in its attempts to lure jobs from London. “We don’t need to do anything more in particular,” according to Nicholas Mackel, chief executive of the industry promotion body Luxembourg for Finance.
“We are open for business as normal. We are not out to poach business, but we are talking to financial institutions and trying to help them find solutions.
“We have a very attractive environment with a good, well-established reputation, a strong ecosystem of service providers and a responsive, business-friendly regulator. We are not expecting entire banks to move here – at least not at the start – but we could see chunks of activity migrate here.”
Jean-Marc Goy, counsel for international affairs at Luxembourg’s Commission de Surveillance du Secteur Financier, made it clear recently that it would be “totally unacceptable” to the country’s regulators for financial companies to try and establish token offices in Luxembourg after Brexit.
‘Not just a postal address’
“EU rules require substance in the jurisdiction where an entity is established and we in Luxembourg are very mindful that that substance complies at all time with the EU rules,” said Mr Goy. “It will depend on the size and the technicality of the activities being relocated, but one thing is for sure: it cannot just be a postal address or a letter-box entity. That would be absolutely unacceptable.”
Meanwhile, the post-Brexit uncertainty engulfing the financial sector has led to Luxembourg fund management company FundRock, which already has a UK operation, announcing it will open an office in Dublin to leverage on post-Brexit opportunities.
In a statement, FundRock said, “Following the market uncertainty created in the investment management sector post-Brexit, FundRock is opening an Irish office to service their clients’ needs and capitalise on the significant rise in UK-based deal flows.”
Times Record
By Edward Robinson
12 February 2017
Back in 2012, Jaime Jorge did something few of his Portuguese compatriots ever did: He turned down a job at Google in London. Jorge, then a 24-year-old software developer, chose to start his own enterprise instead. Five years later, Codacy, the company he co-founded with Joao Caxaria, uses algorithms to automatically correct mistakes in software code for scores of businesses worldwide, including PayPal and Adobe.
They’ve never looked back. “Instead of working 18 hours a day for someone else, we did this cool project for ourselves,” Jorge says at a cafe in Baixa, Lisbon’s historic district. “We had an alternative.”
That’s something new in a small nation long beset with a stagnant economy and a stressed banking industry. For years, Portugal’s best and brightest bolted for plum jobs at global consulting firms such as Accenture or tech giants like Google.
Those brave enough to start their own tech companies almost always decamped for London, where a mix of British creativity, government support, and venture capital had fostered a bustling startup scene. Half the investments in European fintech startups from 2011 to 2016 went to British companies, according to CB Insights, a New York research firm.
Now a confluence of forces is leading entrepreneurs to build their companies at home. Thanks to cloud computing and open source software, it’s easier and cheaper than ever to assemble digital platforms anywhere. And universities such as the Instituto Superior Técnico in Lisbon are teaching students the art of entrepreneurship rather than just grooming them for careers in multinational corporations.
Besides, London is one of the most expensive cities in the world in which to run a business; a rank-and-file software developer there earns three times what a coder makes in Portugal, according to a report by Balderton Capital in London.
In 2012, Portuguese entrepreneur Carlos Silva and his partner, Jeff Lynn, were setting up an equity crowdfunding platform called Seedrs in the U.K. capital. They opted to base their software development team in Lisbon. “I knew there was untapped engineering talent here, and from a cost perspective it would be far more efficient than setting up in London,” Silva says.
As a result, tech hubs are taking root in unlikely locales across Europe-in Barcelona, Munich, Vienna, even Brno, the Czech Republic’s second-biggest city. In Lisbon, ventures have sprung up-ranging from Hole19, an international social network for golfers, to Uniplaces, which lets college students book housing across Europe.
A 2016 study backed by Allianz Kulturstiftung, the German insurance company’s foundation, ranked Lisbon as the fifth-best-performing startup community in Europe, ahead of such stalwarts as Stockholm and Dublin.
Portugal’s tech scene is still tiny, with VCs investing $18.5 million in nine deals there last year, according to Preqin, a global investment research company. But that’s a sixfold jump from 2015, and Portuguese fintech firms are already making waves globally. Feedzai, backed by Citigroup’s venture arm, uses machine learning to automatically spot fraud for clients in Europe and the U.S. CrowdProcess has developed an artificial intelligence program called James that enables hedge funds and banks to predict when fixed income assets will default.
Now comes Brexit. While Britain’s decision to quit the EU probably won’t trigger a tech exodus from London, it may accelerate startup formation elsewhere. Losing access to the European single market would cloud the strategic growth plans of founders who’d intended to use the U.K. as a springboard for expansion in Europe. Losing the freedom-of-movement rights that enable EU citizens to settle in the U.K. with minimal fuss may hurt, too. More than 40 percent of the founders of British startups earned university degrees outside the country, according to Balderton.
The uncertainty around Brexit is already doing damage. In 2016 venture investing in British technology companies fell 15 percent, to 3.6 billion pounds ($4.4 billion), the first drop in seven years, according to Preqin. Investors have canceled or delayed funding in at least 30 British fintech startups since the June 23 referendum, says Innovate Finance, a London trade group. In a speech on Jan. 17, Prime Minister Theresa May promised a “smooth, orderly” departure, but she also pledged to take the U.K. out of the single market. So Brexit-bred volatility has only begun.
Brexit could help EU members close the gap in the startup game. In January, France kicked off an initiative called the French Tech Ticket that will grant 70 foreign entrepreneurs (and their families) residence permits, a year in one of the country’s 41 incubators, and €45,000 to cover expenses.
In April telecom billionaire Xavier Niel plans to open Europe’s biggest accelerator, with space for 1,000 startups, in a refurbished Paris train station. Likewise, national and regional authorities in Italy, Portugal, and Spain have adopted a combination of tax incentives and grant programs to stimulate startup hubs.
Yet these endeavors could stumble if they can’t stoke that indefinable spark that animates Silicon Valley and London’s Silicon Roundabout. Starting a tech venture and winning seed-round funding is so straightforward these days that it’s become a rite of passage for many business grads.
It’s far harder to turn “pre-revenue” companies into thriving enterprises worthy of investment five to six years in. When this happened in California in the ’90s and ’00s, it spawned a generation of serial entrepreneurs, tens of thousands of jobs, and unprecedented wealth. While Europeans, desperate for growth, are trying to follow suit, they won’t transform their economies unless they match the hype of startup creation with the staying power of an ecosystem.
The Portuguese certainly have the promotional part of the equation down. In November more than 50,000 techies descended on Lisbon for the 2016 Web Summit, a kind of Davos for geeks. On opening night, João Vasconcelos, secretary of state for industry, unveiled a 200-million euro fund to co-invest alongside VCs in local startups and foreign companies that relocate to the country.
Then Vasconcelos, who’s known as “the Godfather” in Portugal’s tech circles, asked more than 150 local founders to come on stage. As cannons filled the air with confetti and balloons dropped from the rafters, Codacy’s Jorge beamed alongside Vasconcelos and Prime Minister António Costa to the cheers of thousands of attendees.
When it comes to strategy, Portuguese startups have a knack for expanding internationally early in their development, a trait rooted in the seafaring nation’s diminutive size and history as a trading power. “We have our own identity,” Vasconcelos says. “For centuries we’ve gone abroad. The Portuguese entrepreneur is born with a global mindset.”
They’re also living in an economy that hasn’t grown more than 1 percent annually since 2007. “The genesis of this whole scene was the financial crisis and the lack of jobs,” says Stephan Morais, an executive board member at Caixa Capital, a Lisbon-based VC and private equity firm.
The epicenter of Lisbon’s startup community is a six-story building located between a body-piercing parlor and a cafe in Baixa, an 18th century-era district of storefronts and streetcars. In 2011, Vasconcelos set up an incubator there called Startup Lisboa. Jorge and Caxaria founded Codacy in a room not much bigger than a broom closet. Now Startup Lisboa is home to more than 40 companies in what feels like a clubhouse, as its inhabitants tap away on laptops and talk shop.
Across town, entrepreneur António Lucena de Faria is standing in a classroom showing a guest from Brazil a diagram on the wall depicting a nine-step program for turning ideas into businesses. This is Fábrica de Startups, a four-year-old accelerator that runs boot camps for aspiring startup founders, including applicants from Brazil, Macao, and other Portuguese-speaking lands. This March, Fábrica will host “Tourism Ideation Week” to brainstorm new business models for one of the country’s only growing industries. The best ideas will earn their authors a place in the five-week Discoveries accelerator program this summer.
Even so, laying the building blocks of a startup community is actually the easy part. It’s a good sign that pioneers such as Jorge took a chance on starting a company in Portugal. But the key to scaling up, says Lucena de Faria, is making that option a mainstream feature of Portuguese business. That’s not going to be easy in a country with a professional class long conditioned to avoid risk and seek fortunes offshore. “We have to change the culture of the country,” he says. “That’s the challenge.”
The true test will come a couple of years from now, when Jorge’s generation of startups solicits so-called growth-stage funding. They’ll probably have to visit Silicon Valley or London or Singapore for that, because there aren’t many European private equity investors who play at that end of the spectrum. If these entrepreneurs return with the capital to create more products, more jobs, and greater wealth, they’ll be on their way to turning their gambles into something indelible.
City A.M.
By Christian May
9 February 2017
Pragmatism is rearing its head on the continent.
Alongside recent comments from German finance minister Schauble, who has stressed the importance to Europe’s economy of finding a workable and balanced Brexit deal, we can now add EU commissioner Valdis Dombrovskis.
In an exclusive interview with City A.M. today, he says it is not the EU’s aim to punish the UK. Dombrovskis is not a man to give much away but it’s notable that he could have sent a warning to the City ahead of his arrival this morning – instead, he chose to extend something of an olive branch.
That’s not to say negotiations will be straightforward, or that the City doesn’t have much to lose in the coming process, but it’s increasingly clear that senior figures both in member states and in the EU’s headquarters recognise just how little it has to gain by choking off the City’s air.
If they squeeze too hard, it will be New York that benefits in place of the smaller, regional financial centres such as Dublin and Frankfurt. Their success post-Brexit is linked to London’s survival as a global financial centre.
Meanwhile, it’s worth remembering that Brexit is just one item on the Commission’s to-do list.
The proposed Capital Markets Union dominates much of their time and thinking, along with a broader question of how open versus how protectionist the EU wants to be. A debate now rages within the EU over what – if any – say the British will have in the ongoing conversations regarding the future of financial regulation and policy on the continent.
Those in the EU who lean more towards the Anglo-Saxon way of thinking are terrified of losing the British voice, whereas those who have never shared an enthusiasm for finance and free markets think we should be shut out of the room already – since we won’t be in the club when new rules and structures come into play.
There is little appetite in the City to move away from Europe-wide regulation in financial services, given that many want as smooth a transition as possible to life outside the single market.
With this in mind, it seems likely that British voices will still be part of the conversation on the continent, despite Brexit.
Financial Times
By Reza Moghadam
13 February 2017
Back in 2015, when Brexit seemed only a remote possibility, the EU embarked on one of its most ambitious initiatives: capital markets union. With European firms, even large ones, heavily reliant on a moribund banking system, the project aimed to increase access to capital markets. From harmonising bankruptcy laws to simplifying procedures for prospectuses, capital markets union sought to allow more European firms to tap a ready capital market at their doorstep: the City of London.
Brexit has upended capital markets union by removing London from the equation. As Theresa May’s Lancaster House speech last month made clear that the UK will leave the single market, it is likely that the “passporting” that allows London-based financial firms to service clients across the continent will be lost.
It is clear that the investment banks providing underwriting, trading and derivatives services might have to diversify operations to cities such as Frankfurt, Paris and Dublin. What is less obvious is that the underlying providers of funds — pension and insurance funds, sovereign wealth funds and private asset managers — may also end up leaving for Amsterdam or Luxembourg. All these cities, and others, are hard at work trying to lure different segments of the market.
In other words, a physical splintering of capital markets is under way — with adverse implications for cost and efficiency. Moreover, each jurisdiction receiving a financial institution currently has its own capital markets regulator, and its own interpretation and application of the rules. So far, this has not been an issue because the bulk of capital market activity has been conducted under the oversight of one regulator: the UK’s Prudential Regulation Authority. But that will change after Brexit. So a regulatory splintering is also on the cards — with adverse implications for consistency and efficiency.
Can capital markets union be salvaged? A unified European capital market requires a unifier. Just as the Single Supervisory Mechanism — a common and consistently applied rule book — was the institutional catalyst for banking union, a common regulator could do the same for capital markets union. And unlike banking union, it could be set up relatively easily without politically awkward questions about cross-border deposit guarantees. Nor would a single regulator be cumbersome to orchestrate — the single banking supervisor was up and running in under two years. And, in fact, an embryonic supervisor already exists in the form of the European Securities and Markets Authority.
The new single capital markets regulator, which would sit atop national regulators, would be responsible for overseeing the development of capital markets. Its job would be to ensure that the EU’s Markets in Financial Instruments Directive — which provides harmonised regulation for investment services — is consistently applied across the EU for all capital market activities.
Finally, there is no reason why the UK could not work closely with or even join the common capital market regulatory body, perhaps negotiated as part of the kind of free-trade arrangement for financial services that Mrs May alluded to in her Lancaster House speech. UK membership would obviously lend stability and continuity to European capital markets. But it would also bring other shared advantages, such as the continued use of English law to enforce contracts. And it would allow the EU to tap into the PRA’s capital markets expertise.
The EU’s capital markets union initiative is one of its best ideas. But the project is in trouble. A stronger reform agenda, with a new pan-European regulator and a seat for the UK at the table, can bring back the sense of long-term thinking and vision that Europe sorely needs.
11 February 2017
Jean-Claude Juncker has expressed doubts that EU countries will be able to maintain a united front during Brexit negotiations.
Speaking to Germany’s Deutschlandfunk radio, the European Commission president said: “The other EU 27 don’t know it yet, but the Brits know very well how they can tackle this.
“They could promise country A this, country B that and country C something else and the endgame is that there is not united European front.”
He asked: “Has the time come for when the European Union of the 27 must show unity, cohesion and coherence?
“Yes, I say yes, when it comes to Brexit and (US President Donald) Trump… but I have some justified doubts that it will really happen.”
He added: “Do the Hungarians and the Poles want exactly the same thing as the Germans and the French?
“I have serious doubts.”
Mr Juncker’s words come just days after MPs in Britain approved the bill giving Prime Minister Theresa May permission to trigger Brexit.
On Wednesday at its third reading, the final Commons stage, the European Union (Notification of Withdrawal) Bill passed by 494 votes to 122 – a majority of 372.
It must now go to the House of Lords before the Prime Minister can invoke Article 50, which she has promised to do by the end of March.
Mr Juncker, previously a conservative prime minister of Luxembourg, also told the German radio station that he would not seek a second term as EU Commission president when his current five-year term expires in 2019.
Financial Times
By Jim Brunsden and Thomas Hale
6 February 2017
A Brussels project to “turbo-charge” Europe’s securitisation market risks becoming a casualty of the UK’s Brexit vote amid political clashes over how far financial centres from outside the bloc should be allowed to take part.
The European Commission’s plans would make it cheaper and easier for banks and other investors to use securitisation — packaging and selling on mortgages and other loans — on condition that the structures are simple and easy to understand.
However, political tussles between the European Parliament, on one hand, and Paris and Berlin, on the other, over how to address the City of London’s departure from the EU could delay implementation.
Paul Tang, the MEP responsible for work on the legislation, said that the question of market access rights for non-EU financial firms had become highly sensitive since the UK’s Brexit vote last June.
The new law needs to take into account the fact that many of the banks and other financial services companies that could kick-start the securitisation market are in Britain, Mr Tang said. “It’s very important and if it’s not resolved it could lead to delays.”
The commission’s plan, put forward in 2015, was a response to concerns in some quarters that a heavy re-regulation of securitisation after the 2008 financial crisis may have gone too far, choking off lending to businesses and households. Banks use securitisation to free capacity for further loans.
The EU’s measures would reduce the cost of investing in securities with a “simple, transparent and standardised” structure, known in EU jargon as STS, and must be agreed by national governments and the European Parliament to take effect. The next negotiation meeting between MEPs and national officials is on Tuesday, where the issue of “third country” access is set to be discussed.
Any delay would worry the industry, which has lobbied hard for the law.
Tensions centre on European Parliament plans to include “equivalence” rules in the law. These would allow non-EU companies to create STS-compliant packaged debt on condition that their home countries had strong regulation and supervision.
But the idea has raised hackles in Paris and Berlin, which are wary of setting any precedent on financial market access at a time when Europe is preparing for Brexit talks with London.
The City of London has identified “equivalence”, an idea used in other EU financial services laws, as one of its best options for securing preferential access to the European single market after Britain leaves the EU.
Mr Tang said Brexit had increased the need for such an access regime because of the importance of the City to the market and to exert “leverage” over UK regulations once Britain leaves the EU. Under an equivalence system, the EU can unilaterally withdraw market access rights if a country weakens its financial rules.
“You want to have an impact on financial regulation in London,” he said. “It’s not just about enlarging the market.”
However, people involved in the talks said that representatives from France and Germany made clear at a meeting of national officials in Brussels last week that they were unwilling to discuss such issues.
Mr Tang said work on the law will stall if nations are not willing to negotiate on this point. “I’m happy to wait,” he said.
Critics of the parliament’s position say that the original commission plan, while it required some market participants to be based in Europe, and did not include an equivalence procedure, was in general more open to overseas firms than the parliament text.
“Our original proposal was designed to turbo-charge STS securitisations in the EU,” a commission official said. “That’s why we wanted to keep the market access as open as possible to potential investors.”
Alexander Batchvarov, head of international structured credit research at Bank of America Merrill Lynch, said time was running out for Europe to find ways to revive the market.
“The market is moving sideways; we are losing investors, we are losing interest,” he said. “We are destroying the infrastructure of a market which functions quite well in a European context.”
General Brexit news:
8 February 2017
MPs have overwhelmingly agreed to let the government begin the UK’s departure from the EU as they voted for the Brexit bill.
The draft legislation was approved by 494 votes to 122, and now moves to the House of Lords.
Shadow business secretary Clive Lewis was one of 52 Labour MPs to defy party orders to back the bill and he resigned from the front bench.
PM Theresa May wants to trigger formal Brexit talks by the end of March.
She will do this by invoking Article 50 of the Lisbon Treaty, but requires Parliament’s permission before doing so.
Mr Lewis, who earlier said he was undecided on whether to support the European Union (Notification of Withdrawal) Bill, announced his resignation as MPs began voting for the final time.
He said he “cannot, in all good conscience, vote for something I believe will ultimately harm the city I have the honour to represent, love and call home”.
Leader Jeremy Corbyn said he understood the difficulties the vote presented some of his MPs but said they had been ordered to back the Article 50 because the party would not “block Brexit”.
Shadow home secretary Diane Abbott, who missed last week’s initial vote on the bill, backed it this time.
She told the BBC she had “a lot of misgivings about the idea of a Tory Brexit” and predicted the UK would “come to regret it”, but added: “I’m a loyal member of the shadow cabinet and I’m loyal to Jeremy Corbyn.”
The Labour rebellion was five MPs up on last week’s vote, while former Chancellor Ken Clarke was again the only Conservative to vote against the two-clause bill.
During the voting, SNP MPs were reprimanded by deputy speaker Lindsay Hoyle after they started singing Ode to Joy, the European Union anthem.
Afterwards, Brexit Secretary David Davis hailed the “historic vote”, adding: “It is now time for everyone, whichever way they voted in the referendum, to unite to make a success of the important task at hand for our country.”
Peers will now consider the draft legislation, and a government source told BBC political editor Laura Kuenssberg: “If the Lords don’t want to face an overwhelming public call to be abolished they must get on and protect democracy and pass this bill.”
Earlier the bill survived several attempts to change its wording and add extra conditions.
These included Labour MP Harriet Harman’s bid to protect the residence rights of EU citizens in the UK, which was outvoted by 332 votes to 290, with three Conservative MPs rebelling.
A Liberal Democrat bid for a referendum on the terms of the UK leaving the EU was defeated by 340 votes to 33.
Afterwards, Mr Corbyn tweeted: “Real fight starts now. Over next two years Labour will use every opportunity to ensure Brexit protects jobs, living standards and the economy.”
But Scottish First Minister Nicola Sturgeon accused him of giving the Conservatives a “blank cheque”.
She tweeted: “You didn’t win a single concession but still voted for the bill. Pathetic.”
The bill will be debated in the House of Lords after it returns from recess on 20 February.
Liberal Democrat leader Tim Farron vowed the party’s peers would seek to amend the bill in the Lords, including another attempt to ensure a referendum on the final Brexit deal.
By Tim Wallace
13 February 2017
Britain’s financiers are determined to keep as much of their operations as possible in the UK after Brexit, predicting that London will remain one of the world’s preeminent business centres.
Businesses are reviewing their position in the UK but are making only minor changes to staffing, according to EY’s financial services Brexit tracker.
Few companies have publicly commented on their plans. Of the 222 tracked by EY, 15pc said they expect to move some staff, while 10pc actively re-committed themselves to the UK.
The figures indicate that there is no headlong rush to the door – despite fears from some in the sector that the vote to leave the EU would prompt an exodus from the City of London.
“The number of financial services companies who have publicly said that they are making wholesale changes to their London operations is relatively small given the huge number of firms that comprise the sector,” said Omar Ali, UK financial services leader at EY.
“The industry is quite rightly considering all options as they wait to see how the Brexit negotiations play out, but for the most part people’s plans are about creating optionality and ensuring they can continue to service their clients.”
He said this is because there is no suitable alternative to London.
“London’s financial infrastructure cannot be easily replicated. The UK’s ecosystem – built up over many, many years – is unique,” said Mr Ali.
“We have a close-knit network of industries that work well together, an attractive legal and regulatory framework and a global reputation for talent, innovation, high quality service and easy access to finance. Despite the climate of uncertainty and change, there is every reason to be confident that the UK will remain one of the world’s preeminent financial services hubs.”
Rob James, an analyst at Old Mutual, said he expects banks to keep most of their operations in London, while it could be European companies that have a major re-think, working out how they can best access the financial services on offer in Britain.
“While I believe investment banks will set up subsidiaries [in other EU countries] if they don’t already have them, the gravity of London is very strong and I don’t see that being eroded any time soon. Locations such as Frankfurt simply don’t have the capacity to take on this industry,” he said.
“One solution could be to reverse the process, so that large European companies in need of investment banking services could access them via their non-EU subsidiaries. This may work, as it seems unlikely that the Europeans would want to prevent corporates from accessing such an essential service as a result of Brexit.”
Meanwhile recruitment firm Morgan McKinley found only a small slowdown in financial services hiring.
Employers typically go on a recruitment spree in January and this year was no different – the number of new jobs on the market shot up from 4,980 in December to 9,015 last month.
But that is slightly below the 9,180 the firm found a year ago, and it would usually expect the number of new vacancies to more than double in January.
The number of jobseekers fell more sharply, down by almost 30pc from 16,924 a year ago to 12,068 now.
“Many of our non-British clients are choosing to return home, or seeking opportunities elsewhere in Europe,” said Morgan McKinley’s Hakan Enver.
“People wanting to get ahead of the threat of having their right to work revoked is understandable, but is a huge loss for the City.”
According to real estate group Colliers International, however, London remains the most influential city in the world.
London has topped its index, which looks at factors including talent, location and costs, which indicates that the capital is highly attractive despite the worries around Brexit.
“London may be one of the most expensive cities from a real estate standpoint but when taking all factors into consideration, and the ability of the city to re-invent and evolve, it is superior to all other major European cities in this study,” said Colliers International’s Damian Harrington.
“Recent announcements at the end of 2016 by global tech giants such including Apple, Google, Facebook and IBM re-affirmed their commitment to the future of the London and UK economies.”
8 February 2017
UK Prime Minister Theresa May will visit China later this year in an effort to reestablish relations, which have somewhat faltered since ex-PM David Cameron and his Chancellor George Osborne courted the Chinese government in 2015.
The aim of trip, which has been confirmed by Downing Street, is to reassure the Chinese government that the warm relationship nurtured by Cameron and Osborne remains intact.
Chinese diplomats have been aggrieved by the lack of access they have been given to May since she took office, the Times reports.
They are also concerned about recent statements she made during her meeting with US President Donald Trump, in which she argued the West must avoid being eclipsed by the rising Asian power.
Influential parties outside Britain also have an interest in upsetting China-UK relations. One potential flashpoint is China’s investments in Britain’s nuclear power industry, particularly the Hinkley Point C project, pioneered by Osborne.
In January, a Times investigation alleged the neoconservative Henry Jackson Society (HJS) think-tank is being funded by the Japanese embassy to discredit China, using public figures like former Foreign Secretary Malcolm Rifkind to plant negative news stories.
The agreement reflects the rising tensions between China and Japan – the latter a close US ally in the Asia-Pacific region.
The deal reportedly sees the embassy pay up £10,000 (US$12,500) per month plus expenses to influence and shape UK-China relations in a way which is favorable to Japan.
Rifkind put his name to an article written by HJS which raised concerns over a potential cyber backdoor being built into the Hinkley reactor by the Chinese.
International Business Times
By Karthick Arvinth
9 February 2017
A hedge fund operated by US investment bank Goldman Sachs is to shut down its operations in London and move all staff to New York, reports say.
Citing sources, the Reuters agency said eight staff members who made up the London team of Goldman Sachs Investment Partners (GSIP) were recently told to move to the Manhattan headquarters of the bank or find a new job internally.
A spokesman for the bank confirmed the move but denied that it had anything to do with Brexit.
“This is a discrete decision for reasons specific to GSIP, one investment team within Goldman Sachs, and shouldn’t be construed as anything but that,” he told Reuters.
A so-called “hard Brexit” would likely mean the loss of passporting rights for British financial institutions, which allow banks based in the UK to offer services to companies and governments across the European Union without restrictions.
There are fears that this could lead to an exodus of banks from London to other European cities.
GSIP was set up in 2008 with $7bn (£5.6bn) in assets and was one of the hedge fund industry’s biggest launches.
Reuters said the move to shift the London team to New York was triggered by its former managing director Nick Advani.
Advani announced in June 2016 that he would be stepping down from his role, sources said. He is now an advisory director at Goldman.
The London team’s current managing director, Raluca Ragab, will also leave Goldman once the move to New York is complete, sources added.
Reports last month claimed that Goldman was considering shifting as many as 1,000 of its staff from London to Frankfurt because of concerns over Brexit.
The Independent reported that a total of 3,000 jobs could be moved out of London in total, with other key operations moving to New York, France, Spain and Poland.
A spokesperson for Goldman Sachs said in January: “We continue to work through all possible implications of the Brexit vote.
“There remain numerous uncertainties as to what the Brexit negotiations will yield in terms of an operating framework for the banking industry.”
By Laura Paterson
10 February 2017
An independent Scotland would join a queue of would-be EU members, a senior European official has said.
Jacqueline Minor, the head of representation for the European Commission in the UK, said if Scotland became independent and wanted to join the EU it would be added to the list of candidate countries including Montenegro, Serbia, and Bosnia and Herzegovina. Speaking at a Scottish Parliamentary Journalists’ Association event in Edinburgh, she said: “Were Scotland to become independent, they would join that list.”
She added though that it might be easier for Scotland to meet membership criteria such as democracy, rule of law, anti-corruption and protection of minorities than other candidates.
Ms Minor also poured cold water on Scotland’s ability to secure a special deal in Brexit negotiations.
The Scottish government argues the country, which had a majority of remain voters in the EU referendum unlike the UK, should be in line for a differentiated deal after the UK Government’s move for special deals for the car industry.
Ms Minor said: “The negotiations will be with the United Kingdom and that means essentially the Westminster Government.
“The first question is will the Westminster Government argue in favour of a differentiated arrangement, and it seems to me that at present they are not suggesting that they will.
“Should they do so, should they change their mind, then the other members states would have to look at that. I have to say that there is no precedent whereby a free trade agreement has distinguished between significant regions of the partner country.”
Labour and the Conservatives have said the SNP should “be honest” with voters about an independent Scotland’s membership of the EU.
Scottish Conservative constitution spokesman Adam Tomkins said: “This is a senior figure telling the SNP what it needs to hear.
“For all its moaning about Brexit, it knows fine well an independent Scotland would not simply step into the European Union. Not only would it join the back of the queue, but we now learn it may have to adopt the euro and tackle an eye-watering deficit.
“It’s time for the nationalists to be honest about Brexit and stop using it as a tool to agitate for separation.”
Scottish Labour’s Europe spokesman Lewis Macdonald said: “This is a hugely significant intervention from an experienced and respected official.
“As the SNP was repeatedly told during the 2014 independence referendum campaign, an independent Scotland would have to apply to join the EU like any other country.
“Alex Salmond tried to dismiss this, despite all the evidence to the contrary. Now it’s time for the SNP to be honest with voters – an independent Scotland would have to join the queue.”
The Scottish Greens’ external affairs spokesman Ross Greer said: “There are five million EU citizens living in Scotland, it’s unthinkable that they will be told to join the back of a mythical queue.
“It shows just how little Labour and Conservative MSPs know about Europe that they think countries queue to join.
“What was made clear by this high ranking European Commission official was that Scotland already meets much of the requirements needed to continue EU membership as an independent nation.
“Rather than trying to undermine efforts to keep Scotland in the EU, unionist politicians must begin to recognise the democratic wishes of the people of Scotland who voted overwhelmingly against being dragged along with the angry, isolated Britain planned by Theresa May. They at least deserve a choice between these two futures.”
By Andrew Woodcock
13 February 2017
The European Commission has downgraded forecasts of UK economic growth in the wake of the Brexit vote, with the rest of the European Union overtaking Britain in 2017 and 2018.
Although the UK enjoyed “brisk” GDP growth of 2 per cent last year, the commission warned that the impact of the vote to leave the EU “has yet to be felt” and is expected to become apparent later this year.
In its Winter Economic Forecast, the commission projected that UK economic growth will be “moderate in 2017 and weaken further in 2018”. It forecast growth of 1.5% in 2017 – down from a 2.1% prediction a year ago, before the Brexit vote – slowing further to 1.2 per cent next year.
Over the same period, overall EU growth is expected to head upwards, from 1.6 per cent in 2014 to 1.8 per cent in both this year and next. Growth forecasts for the eurozone are upgraded from 1.5% to 1.6% for this year and 1.7% to 1.8% for next year.
Economic Commissioner Pierre Moscovici named Brexit as a “significant downside risk” to the EU as a whole.
By Josie Cox
7 February 2017
Brexit will prove to be little more than a bump in the road for the UK economy in the long run and the country will successfully defend its spot as one of the world’s fastest growing developed economies in decades to come, according to predictions published in a new study.
Professional services firm PricewaterhouseCoopers in a report published on Tuesday projects that the UK will slide just one place—to 10th from 9th—in the global purchasing power parity (PPP) rankings by 2050.
PPP values a country’s currency in relation to other currencies, based on the cost of a local market basket of goods.
PwC also predicts that the UK will slip from 5th to 9th in unadjusted GDP terms over that time period, but that it will be the fastest-growing of the “Group of Seven” economies over the whole period to 2050.
“After a year of major political shocks with the Brexit vote and the election of President Trump, it might seem brave to opine on economic prospects for 2017, let alone 2050,” says John Hawksworth, the chief economist at PwC.
He adds, however, that he has “a relatively positive long-term growth projection for the UK” as a result of “favourable demographic factors and a relatively flexible economy by European standards”.
PwC’s forecasts come just days after the Bank of England dramatically lifted its 2017 GDP growth forecast to 2 per cent, from 1.4 per cent in November.
However, the Bank anticipates a slowdown in growth with GDP expected to expand by 1.6 per cent and 1.7 per cent in 2018 and 2019.
The Bank had previously projected that the economy would take a cumulative hit of 2.5 per cent of GDP by 2019 due to Brexit. It now forecasts a 1.5 per cent of GDP hit, equivalent to around £30bn in today’s money.
PwC in Tuesday’s report said that it assumes the main economic impact of Brexit will occur between now and 2020.
“After 2020, UK growth is assumed to revert to its long-term trend as determined by the fundamentals of working age population growth, investment in human and physical capital, and technological progress,” the report’s authors wrote.
Beyond the UK, PwC forecasts that the world economy will double in size by 2042, by growing at an average annual rate of 2.5%.
It sees China retaining its spot as top country by PPP GDP and it forecasts that six of the seven largest economies in the world will be emerging markets by 2050.
The European Union’s share of world GDP could fall to below 10 per cent by 2050 with France falling out of the top 10 and Italy out of the top 20, according to PwC’s report.
“Emerging economies offer great opportunities for business [and a] failure to engage with these markets means missing out on the bulk of economic growth we expect to see in the world economy between now and 2050,” Mr Hawksworth said.
“To succeed, businesses will need to adopt strategies with the right mix of flexibility and patience to ride out the short-term economic and political volatility that is a normal feature of emerging markets as they mature.”
New Statesman
By Felix Martin
12 February 2017
The City of London has always (and not accidentally) baffled outsiders but Brexit has draped a new question over its age-old mystique: is London’s financial sector the UK’s trump card, or its Achilles heel, in negotiations over leaving the EU?
During the EU referendum campaign, the City overwhelmingly backed Remain. It argued that large parts of its franchise depended on being able to sell its services into the Continent. It seemed obvious, therefore, that the City’s access to the single market must be a high-value chip on the EU’s side of the table in the game of Brexit brinkmanship.
Is it? In his most recent intervention, Mark Carney, the governor of the Bank of England, claimed it is the EU that needs the City just as much as the other way round. The City, he pointed out, is “the investment banker to Europe”: half of all equity and debt funding for eurozone companies is raised in London. So, for the EU to cut London off would be an act of mindless self-harm.
The fact is that both claims are true, because the City is not a unitary industry but a shorthand for the nebulous agglomeration of banking, insurance, asset management, legal, accounting and numerous other services that firms based in London (and quite a few in Edinburgh and elsewhere, too) provide to clients all over the world. Brexit will mean very different things for different parts of this diffuse group, and for the individuals, companies and governments that are their customers.
One simple dividing line is between firms that provide financial services to retail customers – the mortgages, bank deposits, investment funds and insurance products sold to individuals – and those whose business is in the wholesale markets: arranging bond or equity issuance for large companies, insuring the insurance companies themselves, or trading in foreign exchange, for example.
The provision of retail financial products is closely regulated by the EU’s Markets in Financial Instruments Directive. This allows British firms to go to other EU member states and seek out clients there without any need for further approval – the so-called passporting system. In practice, the markets for many retail products remain dominated by national players: but in fund management the passport system is indeed in widespread use. Consequently, the fund management part of the City stands to lose from Brexit.
The market for wholesale financial services, however, operates quite differently. When a eurozone business wants to issue debt or equity, or a eurozone insurance company wants to lay off its risks, the client comes directly to London to hire its investment bank or find its syndicate at Lloyd’s. Because the transactions take place in the UK, the City firms involved have no need for an EU passport – any more than they do when they are selling to American or Asian clients. For this part of the City, Brexit matters quite a bit less.
Then there is the infrastructure of the financial system itself: the exchanges on which shares and other financial instruments are traded, and the clearing houses where millions of daily payments are recorded and settled against one another. The City does a lot of this as well.
It differs from either the retail or the wholesale services described above, because it is highly transactional in nature and not intrinsically complicated – and so, in principle, could easily be moved. However, for the same reasons, it is the least profitable part of the sector and the one being transformed most rapidly by automation and digitisation in any case. There would be transitional costs to any relocation – but little net economic benefit to the UK or the EU. Brexit won’t make many winners here either way.
So, there are parts of the City, such as fund managers, that need the single market a lot more than the EU needs them. There are parts, such as investment banks and the wholesale insurance market, on which the EU is quite heavily dependent. And there are still other parts that get neither side very excited, and that the march of technology will probably overtake soon anyway.
Yet there is something perverse about this debate. For beneath it is an unspoken assumption that the City is a lodestone of economic dynamism and a treasure chest of tax revenues and, as such, the grand prize in the Battle of Brexit.
Do we need reminding that, in recent and painful memory, one part of the City – the banking sector – was exposed as something else entirely: a source of catastrophic economic risk and a monumental drag on the public finances, almost single-handedly responsible for the doubling of the UK national debt in the space of seven years?
The irony is even more extreme. For isn’t the financial crisis the event which, more than any other, shattered the public’s trust in our elite and fuelled the anti-establishment rage that led to Brexit? Yet somehow the vampire squid of 2008 has become the golden goose of 2017.
I fear the debate over passports and market access is in this sense, a dangerous distraction from three much more serious facts: that 2008 exposed simple but egregious flaws in the structure of our banking system, for which taxpayers were required to pay; that little has been done to remedy these deficiencies; and that the combination of these first two facts has poisoned public trust in the UK’s financial and political leaders.
With Brexit, and the election of Donald Trump, the establishment’s failure to remove the root causes of the financial crisis has come back to haunt them. It looks as though the eurozone’s turn will be next.
So, rather than comforting ourselves that the EU needs the City, we should be asking ourselves what kind of City it is that the UK really needs.

Select Milano Monitor 06/02/2017

Nuova City cercasi e Milano prova a battere Parigi e Francoforte



By Mariarosaria Marchsano

2 February 2017


Summary from Italian:


  • It is noted that the first objective of Milan Mayor Giuseppe Sala is to attract the European Medicines Agency to his city, possibly in the area where the Expo was held in 2015. However, the city is also looking to attract financial groups and intermediaries to become the new “City of Europe”.
  • The Mayor is working to bring together political, economic, social and academic forces to make these ambitions a reality.
  • This is being played out on the axis between Milan and Rome, with the government solidifying its support, with the exception of the Five-Star Movement, through the Finance Committee’s recent passage of a resolution which urges the Gentiloni Government to work to establish the Milan Financial District which would be able to carry out the full range of investment services under the MIFID Directive.
  • While competing with cities like Paris, Frankfurt and Brussels for such institutions, it is relying on its pre-existing ties with the LSE to make its case.
  • On 26 January, the Milan City Council approved a resolution to support the EMA transfer in the Expo area, alongside new science park, the Human Technopole. Providing a suitable headquarters a still a real issue, and the Council is also considering as an alternative the financing for a new structure from scratch. A real estate developer must be found, and the necessary financial resources must be set aside.
  • The Lombardy region is the first in the country for pharmaceuticals and biotech, with half the national total employees, production, research and clinical trials – 28,000 are directly employed while 18,000 work in ancillary companies.
  • Pharma sector products represent 50% of Milan’s exports, growing 3% since 2014.
  • Head of Mayor Sala’s cabinet, Mario Vanni, is driving this objective forward, and noted that Milan has many advantages, particularly in quality of life and real estate, having very competitive prices for office space.
  • The Mayor’s cabinet is also preparing a document with the Ministry of Economy and Finance a dossier about Milan to present to investors and the international press; the city has also placed an announcement advertising for a manager to promote the city and its brand around the world.
  • Select Milano is briefly mentioned at the end as helping Milan to promote itself post-Brexit. It is also helping to put in place the necessary regulatory and bureaucratic steps to be consistent with EU requirements.


La Brexit, un capolavoro economico dello Uk

Milano Finanza


By Bepi Pezzulli

1 February 2017


Summary from Italian:


  • Post-Brexit London will be able to pursue its four markets of interest without having to follow EU obligations: Chinese, Islamic, fintech and clean energy trading.
  • London has in the pipeline greater fiscal competition measures, as well as plans for greater trade liberalisation which will make it a “23rd century city”.
  • According to TheCityUK political director Gary Campkin, while the UK has seen great success in the export of EU financial services, In the next 10 years 90% of economic growth will come from Asia, so the UK should be focused on emerging markets like China or India.
  • Thanks to Mark Carney, China’s yuan has been admitted as a “reserve” currency in the IMF.
  • The Bank of England and the People’s Bank of China have also put yuan transaction clearing in London.
  • Mervyn King sees that the huge segments of shadow banking, private debt and P2P lending in London can produce significant efficiency savings and economic growth; it will make sense to capture more of the private banking market which is more stable and attractive than corporate finance, thus helping to offset the extra risk associated with alternative finance.
  • After the financial crisis of 2008, the Bank of England was left alone to solve internal problems limited by EU-imposed rules; however, it now has the freedom to rethink its entire economic paradigm. It can work towards its own version of Abenomics (referring to the policies and reforms of Shinzo Abe of Japan).
  • Philip Hammond suggested the harmonisation of the BoE and the Treasury; this would be a brave move, but could help to end austerity.


Milano, un ecosistema con regole certe per imprese e finanza

Milano Finanza


By Roberto Tasca

4 February 2017


Summary from Italian:


  • In recent years, Milan has seen significant civil, economic and cultural growth, becoming an attractive and truly cosmopolitan city. The city government’s newfound credibility has allowed it to define objectives and strategies in consultation with regional and national institutions, and its dedication to transparency and efficient budgeting has allowed it to attract new international investment and compete with other European capitals. Given this, it would make sense for Milan to take advantage of the Brexit opportunity.
  • Milan can build upon its pre-existing links with the LSE to make this a reality. Mayor Giuseppe Sala has had various meetings in London with figures from the worlds of business and finance to discuss the possibility of transferring their operations to Milan. Goldman Sachs and Nesta have both raised the possibility of moving some operations to Milan.
  • Milan is an ideal geographic location, with excellent facilities for its residents and workers, and various infrastructural developments in the pipeline. The government has also put in place new tax cuts to help facilitate the transfer of workers post-Brexit.
  • Another potential win for Milan could be the impending transfer of the European Medicines Agency – Milan is now an official nominee in the race to open its doors to the institution.
  • Milan is working to promote itself, with the possibility of conducting roadshows in London and other European cities. As a tourist destination, it saw 4 million visitors in 2016 – an increase even over 2015 when the city hosted the Expo.
  • Milan is working with the central government to achieve its objectives, and is confident that it can attract both the EMA and Euro clearing activities.


Milan and Brexit:


Italy to set up task force to lure banks and businesses from the City to Milan



By Nick Squires

1 February 2017


Italy is to set up a task force to lure businesses and investors from the City to Milan in the wake of Brexit, the country’s foreign minister announced.


Angelino Alfano said the government would aggressively promote Italy’s financial capital as a viable alternative to London.


“We’re going to set up a task force. The government is on Milan’s side in the post-Brexit game,” the minister said at a conference in Rome. “Who says that businesses that leave London should all go to Frankfurt? We need to be able to attract to Milan businesses that decide to leave London.”


Brexit offered many opportunities for Italy, “and we need to work to make Milan a highly-competitive city in the post-Brexit era,” Mr Alfano said.


The capital of the wealthy Lombardy region, Milan is home to Italy’s main stock exchange, has two airports and boasts Bocconi University, one of Europe’s most acclaimed for business studies and finance. The city’s profile was boosted last year by the success of the Expo world fair, which attracted 20 million visitors, and its fashion and food are big draws for foreigners.


But Milan’s ambitions to lure away firms from the City face numerous obstacles, from language to labour laws. Italy has one of the lowest levels of English language proficiency of any country in the EU – only 34pc of Italians have a working knowledge of English, according to a study by the European Commission – and firms looking to leave the UK might instead opt for Dublin rather than Milan.


High social security costs mean that employees in Milan are more costly than those in London and rigid labour laws make it harder to make workers redundant.


Italy’s legal system is also notoriously slow and inefficient, with court cases dragging on for years and even decades. In the latest annual Ease of Doing Business Survey by the World Bank, Italy ranked 50th out of 190 countries, placing it behind Serbia, Belarus, Moldova and Armenia. Britain ranked seventh.


The survey measures how easy or hard it is to start a business, register property, obtain credit, pay taxes, enforce contracts and resolve insolvency, among other factors.


“In the current cost-conscious environment, I think companies will be concerned at how much more it costs to set up a business in Milan and how much harder it is to get rid of people if needed,” said a British corporate lawyer familiar with both Italy and the City. “Italy’s labour laws make it difficult to fire employees. I think Dublin is a much more attractive proposition.”


(Note: This story also features in The Local, Aska News, Il Sole 24 Ore, Il Giorno, Sardegna Oggi, Agenzia Nova)


Per l’Euroclearing Milano è più adatta di Francoforte



By Alberto Mattioli

28 January 2017


Summary from Italian:


  • Brexit provides a great opportunity for Milan to be promoted as the new financial capital of Europe by bringing Euro clearing activities to the city.
  • The parliamentary Finance Committee’s approval of the EEIG shows its commitment to helping Milan take up these responsibilities.
  • Milan appears to be the best place to move the Euro clearing activities to because of its pre-existing ties with the LSE – helping to keep profits within the LSE Group.
  • Further, Milan is richer and more populous than key competitor, Frankfurt, and holds a better infrastructure to house Euro clearing activities.
  • Milan also offers high-level international schools, prime real estate, a diversified industrial base and unrivalled cultural vibrancy, thereby already having an ecosystem for excellence.
  • Though Italy has a lower GDP than Germany, private capital is higher.
  • Milan does not threaten London, and Italy needs a growth engine to drive forward the country’s system – moving financial activities to Milan would help to bring thousands of new jobs and increase tax revenue.


Brexit: Londra Porto Franco, Milano Città Stato

Affari Italiani


By Pietro Paganini

4 February 2017


Summary from Italian:


  • It is asserted that London wants to become a free economic zone and attract the world’s billionaires. Its growth strategy entails attracting Chinese and Islamic finance, fin-tech and clean energy trading.
  • Acting as an offshore centre to other European capitals, London could capture the private banking market, making it more stable and attractive than the volatile corporate finance market.
  • In order to find an alternative to London, European cities like Amsterdam, Barcelona, Berlin, Frankfurt, Madrid, Milan and Paris must organise themselves to set up a network of specialised cities, each able to attract investors and visitors more and better than London. In Italy, Milan is the only city capable of competing in such a scenario.
  • Transferring Euro clearing activities to Milan, for example, would allow the profits to remain on the balance sheet of the LSE while leaving Milan to create jobs and induce growth.


Brexit, 100 esperti e 50 milioni dal governo per portare l’Agenzia europea del farmaco da Londra a Milano



4 February 2017


Summary from Italian:


  • Finance Committee chair Maurizio Bernardo stated that a team of 100 experts is ready to form networks to make progress on all initiatives to bring business from London to Milan post-Brexit, particularly the European Medicines Agency. €50 million has been allocated by the government on this front.
  • This team, comprising figures from academia, finance and non-profits, has already been meeting for months in Milan and Rome on various projects and proposals related to this initiative.
  • It is also noted by Il Giorno that the government is making moves to attract the Unified Patent Court, as well.


Brexit: perchè l’Italia non riuscirà ad attrarre capitali ed imprese straniere

Secolo Trentino


By Giuseppe Papalia

4 February 2017


Summary from Italian:


  • Article which asserts that Italy will have trouble attracting business post-Brexit because of various internal problems within the country, including uncompetitively high rates of taxation, slow bureaucracy and an inefficient judiciary. Real long-term reforms are needed, not simply “economic diplomacy”.


Europe and Brexit:


EU will lose out from bad Brexit deal on City, says leaked report

The Guardian


By Daniel Boffey

1 February 2017


The European commission’s Brexit negotiators must strike a “workable” deal with Theresa May’s government to protect the City of London or the economies of the remaining member states will be damaged, a leaked EU report warns.


The document – which has been seen by the Guardian – describes it as critical for the economic health of the remaining member states that the current financial eco-system is not hit in the coming Brexit negotiations.


The paper, drawn up by officials working for the European parliament’s powerful committee on economic and monetary affairs (Econ), warns that UK-based financial services account for 40% of Europe’s assets under management and 60% of its capital markets business. “And UK-based banks provide more than £1.1tn of loans to the other EU member states,” the Econ secretariat’s paper notes.


“If financial services companies choose to leave the UK as a result of Brexit, the consequences should be carefully evaluated.


“A badly designed final deal would damage both the UK and the other 27 EU member states.


“The exclusion of the main European financial centre from the internal market could have consequences in terms of jobs and growth in the EU. It is in the interest of EU 27 and the UK to have an open discussion on this point.”


The warning echoes recent comments from the governor of the Bank of England, Mark Carney, when he claimed there are “greater short-term risks on the continent in the transition than there are in the UK”. Last month, the European commission Brexit negotiator Michel Barnier was also reported to have told MEPs that with the City “there will be a special/specific relationship. There will need to be work outside of the negotiation box … in order to avoid financial instability.”


Barnier later denied making the remarks. “When asked on equivalence I said: EU would need special vigilance on financial stability risk, not special deal to access the City,” he tweeted.


Equivalence is the mechanism whereby the UK’s regulations and the EU’s are to be regarded as of being of equal standing, allowing British-based financial institutions to continue to operate across the EU post-Brexit.


However, the 26-page document, titled Impact of the UK withdrawal on Econ areas of competence, and dated 13 December, notes that an analysis of offering equivalence status to the UK has been designated as a priority by “Econ coordinators”.


It says: “Given the considerable interdependence between the UK and the EU economy and financial systems, it is critical that a workable agreement is achieved that not only maintains high regulatory standards but also delivers growth and jobs across the EU …


“As an overriding principle, one can assume that after Brexit, the closer the UK remains to established EU regulatory standards, the greater the degree of access the UK can have to the single market – and vice versa, without prejudice to other considerations (eg the principle of the unity of the four freedoms).


“If the UK does leave the single market and thereby resigns from the four freedoms and the jurisdiction of the court, then consideration could be given to tools such as third country/equivalence passporting regime, and this should be taken into account on existing regimes as well as future pieces of financial legislation: eg on securitisation.”


The revelation will provide some reassurance to the secretary of state for exiting the European Union, David Davis, as Britain prepares to trigger article 50 negotiations on 9 March. His claims in recent months that the EU has more to lose than the UK from the City’s sudden departure from the EU’s regulatory framework had been scoffed at by European diplomats.


It will also provide the government with some firepower as the UK parliament debates the bill that will give Theresa May the power to trigger Brexit talks.


Along with the risks the Econ committee sees in Brexit, the report does also foresees some positives for the EU’s policy agenda in the UK’s withdrawal from the European institutions.


The commission has recently proposed a single set of rules for the calculation of companies’ taxable profits in the EU. The common consolidated corporate tax base would ensure that profits are shared between the EU member states in which a company is active.


The report notes: “While it is expected that the UK would oppose the CCCTB proposal (as was the case for the 2011 CCCTB proposal), the UK’s departure from the EU may increase chances of reaching the required unanimity in council – although the UK is not the only member state to have opposed the CCCTB, and opposition from other member states is likely to remain.”


It also suggests that the UK would have opposed a commission proposal for a “double taxation dispute resolution mechanism”, whereby companies and individuals would have recourse to a pan-European body if they were being taxed on the same profits by multiple national revenue bodies.


“While the UK may support the proposal in principle, it is rather unlikely that the UK would agree to a binding mediation and a decision-making body at EU level,” the document says. “Again, the UK’s departure from the EU may therefore increase chances of the proposal reaching the required unanimity in council.”


Germany launches BRAZEN bid to lure banks out of London amid Brexit



By Lana Clements

30 January 2017


A special conference to entice financial heavyweights out of the UK has this week been laid on by Germany’s Bafin financial regulator.


And during the invite-only event, the watchdog is telling around 50 representatives from 20 banks how they can shift operations to Frankfurt following Brexit.


Goldman Sachs, Morgan Stanley and Citigroup are among the top US firms that are thought to have been invited and attended the work-shop.


The European Central Bank and Germany’s central bank Bundesbank were also reportedly at the event.


Germany is keen to secure new jobs amid reports some firms are looking at moving some roles to the continent.


However, Goldman Sachs recently played down reports that it is moving staff.


Citigroup has not made any public decision on job movements, despite reports that it’s also looking to transfer roles.


The event was held in Bafin’s Frankfurt office.


Peter Lutz, a Bafin official in charge of bank oversight defended the event.


He said: “Brexit is … no reason for celebration. But we have to be pragmatic.”


Hubertus Vaeth, head of Frankfurt Main Finance, a group backed by local government to promote the city, has predicted that 10,000 jobs will move from London to Frankfurt over five years.


Theresa May recently confirmed that Britain would leave the single market as it departs from the EU, which means banks are likely to lose so-called passporting rights that allows firms to sell goods and services across the bloc.


The Prime Minister outlined her Brexit vision and allayed business fears that there would be a cliff-edge exit.


Mrs May also reportedly met with the leaders of Wall Street banks to hear Brexit concerns.


She said her idea of a “global Britain” would keep posts in the UK.


JP Morgan and HSBC have said that parts of their businesses would be moved in response to the divorce from the union and Mrs May’s decision to rule out single market membership.


Paris is vying with Germany to try to steal London’s crown as a financial centre.


London’s rivals roll out red carpet for bankers fleeing Brexit



By Ivana Kottasova

1 February 2017


From Frankfurt to Warsaw, European cities are preparing to welcome London’s bankers.


British lawmakers are expected to vote Wednesday to authorize Prime Minister Theresa May to start the formal process of pulling the U.K. out of the European Union.


Britain’s departure is likely to spark an exodus of bankers who need to move abroad in order to safeguard their European operations.


Cities around Europe are welcoming them with open arms. Madrid, Amsterdam, Berlin and Lisbon have been mentioned as possible contenders, but the following five cities are the frontrunners in the quest to attract bankers:



Frankfurt is a natural choice for many banks. The German city is home to the European Central Bank, the Bundesbank, as well as the European Insurance authority.


The German Federal Financial Supervisory Authority hosted 50 representatives from some of the world’s biggest banks on Monday to explain the steps required to set up a business in Germany.


“As committed Europeans, we do not see Brexit as a reason to celebrate,” said Peter Lutz, the authority’s deputy head of of Banking Supervision. “But now we need to take a pragmatic approach and offer institutions the necessary supervisory clarity for their strategic decisions.”



Paris, only a short train trip from London, is hoping to boost its financial services sector by attracting bankers fleeing Brexit. The city launched an advisory service for companies that want to relocate from London following the U.K.’s vote to leave the European Union.


HSBC, (HBCYF) Britain’s largest bank, has already said it could move roughly 1,000 jobs from London to Paris.


Financial services firms in Paris manage 2.6 trillion euros worth of assets, according to the French government. The city is also home to Euronext, Europe’s second largest stock exchange, which is just behind London in terms of transaction volume and stock market capitalization.


Paris is also key for the bond markets; firms in Paris carry out nearly 35% of total bond issues in the eurozone.


However, some banks are concerned about strict French labor laws.



Luxembourg is eying the private equity firms operating in London. Like banks, they are able to operate across the EU if they set up business in any of the member states. After the U.K. leaves the EU, firms based there will likely lose these rights.


Blackstone Group (BX), one of the world’s largest private equity firms, said it already took steps to make sure it has the right to operate in Luxembourg.



There are plenty of advantages to Dublin: English as the main language, same time zone as London, low corporate tax rate.


Plus more than half of the world’s leading financial services firms already have subsidiaries in Dublin, according to the city’s International Financial Services Centre.


Barclays (BCLYF), which already operates a subsidiary in Ireland, said it is considering an expansion of its operations in Dublin.


Dublin is home to the European headquarters of major tech companies, including Google (GOOGL, Tech30), Facebook (FB, Tech30), Dropbox and Twitter (TWTR, Tech30).


Krakow, Warsaw & Wroclaw

Poland is not a member of the eurozone, but is still hoping to attract financial services back office and support jobs. Foreign companies already employ 177,000 people in Poland in offshore business services.


The Polish Association of Business Service Leaders said the country is the international business service sector leader in Europe.


What the World’s Biggest Bank Bosses Say About Brexit Exodus



By Gavin Finch

31 January 2017


Frankfurt and Dublin are emerging as the biggest winners at London’s expense as banks prepare for Brexit by planning new hubs in the European Union.


Standard Chartered Plc and Barclays Plc are considering choosing Ireland’s capital as their EU base for ensuring continued access to the bloc, according to people with knowledge of their contingency plans. Goldman Sachs Group Inc., Citigroup Inc. and Lloyds Banking Group Plc are eyeing Frankfurt, other people said.


Banks are fleshing out their plans after Prime Minister Theresa May announced in January that the U.K. would leave the EU’s single market in 2019, likely spelling the end of passporting, where banks seamlessly service the rest of the bloc from their London hubs. Frankfurt is a natural pick for firms fleeing London given a financial ecosystem featuring Deutsche Bank AG, the European Central Bank and BaFin, one of the only regulators with experience overseeing complicated derivatives trading.


As for Ireland, it’s presenting itself as a low-tax, English-speaking location with similar laws and regulations to Britain.


All told, TheCityUK lobby group reckons as many as 35,000 jobs could be relocated out of the U.K. Dublin could potentially gain between 12,000 and 15,000 jobs as a result of Brexit, Goodbody Stockbrokers has said. Bloomberg News conducted interviews and reviewed public statements to discover what each major bank is now planning.


Goldman Sachs


The Wall Street firm is considering making Frankfurt its main hub inside the EU and could move as many as 1,000 employees, including traders and senior managers, according to a person familiar with the matter. Chief Executive Officer Lloyd Blankfein has publicly said the bank has shelved plans to move more key operations to the U.K.


“We were on track to move more and more of our global activities, so global ops, global tech — all those things made more and more sense to operate out of the U.K.,” because of the time zone, Blankfein said in a Bloomberg interview in Davos, Switzerland, in January. “Now, we’re slowing down that decision, and only moving there what we have to move there. We don’t value doing things twice; moving them there and then moving them away from there.”



“We have to accommodate the laws of the land in both Britain and the EU, and that will determine how many jobs and how many people you have to move,” JPMorgan Chase & Co. CEO Jamie Dimon said in Davos earlier this month. “It looks like there will be more job movement than we hoped for.”


Before the referendum, Dimon said as many as 4,000 of its 16,000 U.K. employees could be moved to the continent after Brexit.




“Yes, we will have to move bankers — we have an SE in Frankfurt, we have an appropriate setup in Spain,” Andrea Orcel, head of UBS Group AG’s investment bank, said in Davos, referring to the Swiss bank’s German subsidiary, which is licensed to do investment banking. “We still have flexibility to decide where to go, but we will definitely have to move.”


CEO Sergio Ermotti has said he may have to move as many as 1,500 of about 5,000 U.K. investment banking staff. Some of those employees may be relocated to Madrid, Bloomberg reported last week.




HSBC Holdings Plc CEO Stuart Gulliver said in January that staff generating about 20 percent of its London investment-banking revenue may move to Paris, where it acquired a French commercial bank more than a decade ago. “Activities specifically covered by EU legislation will move,” he said.


Before the June referendum, Gulliver said a Brexit vote would likely result in about 1,000 of the bank’s 5,000 London-based staff relocating to the French capital.




The U.K. bank has settled on Dublin for its main hub inside the EU and is planning to add about 150 staff there, people with knowledge of the decision said last week.


Barclays CEO Jes Staley has struck a different tone to other bank bosses. He said in Davos that it would be “very difficult” to dislodge a financial center like London. If needed, Barclays may reassign its Frankfurt branch to its Irish subsidiary, he said.


“Same people, same traders, you have to book a trade in Ireland as opposed to London, but that’s not a wholesale move of our capability from London to Ireland,” he said.


Standard Chartered


The bank approached Irish officials about making Dublin its legal base inside the EU, people familiar with the discussions said in December. No final decision has been taken, and the firm is also in talks with Germany’s regulator about choosing Frankfurt.




Citigroup is evaluating locations for parts of its London broker-dealer business, including Ireland, Spain, Italy, Germany, France, and the Netherlands, Jim Cowles, the bank’s top executive for Europe, the Middle East and Africa, said at a conference in Dublin on Jan. 24. Cowles said he expected the bank would make a final decision by the end of the first half.


Bloomberg News reported in November that the firm was in discussions with BaFin about moving some of its London-based equity and interest-rate derivatives traders to Frankfurt. Citigroup is also in discussions with the ECB and regulators in EU nations including Ireland about relocating other parts of its operations.


Morgan Stanley


Before the vote, Bloomberg News reported that Morgan Stanley would likely move 1,000 of about 6,000 U.K. employees out of the country in the event of Brexit. Morgan Stanley President Colm Kelleher said the firm would likely move its local headquarters to Dublin or Frankfurt.


“If we are outside the EU, and we don’t have what would be a stable and long-term commitment to access the single market, then a lot of the things we do today in London, we’d have to do inside the EU-27,” said Rob Rooney, CEO of Morgan Stanley International, after the vote.


Morgan Stanley executives said New York would likely be the big winner from Brexit as U.S. firms would probably allocate headcount away from Europe altogether.




Daiwa Securities Group Inc. CEO Takashi Hibino said the Japanese brokerage is considering Frankfurt and Dublin among candidate cities to host European operations it moves out of London. The firm, the majority of whose 450 European staff work in London, has yet to establish a licensed entity in the EU, and is running simulations with consultants.


Lloyds Banking Group


The U.K. bank plans to convert its Frankfurt branch into a subsidiary, making that its base inside the EU, a person with knowledge of the matter said earlier this month. A small number of people would move from London. The bank has yet to apply for an extension of its German banking licence.


Bank of America


“You’ve got to get your legal entity structure correct so you can operate in two different environments: one inside the U.K. and one outside,” Bank of America President Brian Moynihan said in Davos. “We already have a lot of that structure set up. Then you have to start think about where locations are, but I think that’s a bit premature.”


Credit Suisse


Credit Suisse is exploring options for expanding in Dublin after Brexit, two people with knowledge of their plans said last week. Board member Noreen Doyle said at a conference in Dublin on Jan. 24 the bank was in the “early stages” of examining alternatives to London after Brexit.


Bank of China


Bank of China Ltd. is in talks with Irish officials about potentially moving some of its U.K. operations to the country after Brexit, Ireland’s Sunday Independent newspaper reported.


Sumitomo Mitsui Financial Group


Sumitomo Mitsui Financial Group Inc. is also eyeing moving some of its U.K. employees to Ireland and has held a series of meetings with local regulators, the Sunday Independent reported.


Brexit battle: Paris sends raiding party to London to seduce bankers

The Local


6 February 2017


Paris once again made a move to profit from all the uncertainty around Brexit by sending a crack team to London to woo bank and finance chiefs back across the Channel.


The French government and city leaders in Paris have made no secret of their desire to take advantage of the insecurity of some finance firms in London with Brexit looming large.


Since the British public voted for EU divorce last June, France has taken several steps to entice companies and banks to up sticks and move across the Channel. They’ve cut red tape and even published documents in English.


In January there was perhaps proof that the charm offensive was working when HSBC said it would likely switch 1,000 jobs to Paris from London given Britain’s departure from the EU.


On Monday the French capital, one of many European cities fighting for post-Brexit business, stepped up its offensive by sending dignitaries to London to meet with bankers, insurance firms and asset managers to persuade them to move their activities to Paris.


“The battle is tightening between Paris and Frankfurt,” said a spokesperson for Valerie Pécresse, the head of the Ile-de-France region, who led Monday’s raiding party to London.


Alongside Pécresse will be Gérard Mestrallet, who is president of Paris Europlace, the body responsible for promoting the French financial sector.


Mestrellet will present a comparative study demonstrating the attractiveness of Paris.


He will be accompanied by Australian Ross McInness, who was appointed ambassador to the new one-stop shop called Choose Paris Region.


It was set up in November to provide firms everything they and their staff needed to relocate across the Channel.


“Anyone who’s worked in France for the last few years knows to go beyond some of the cliches and look at hard facts, hard figures,” he told Reuters at the time.


“This is a business-friendly country,” he said, before telling journalists “When was the last time you booked a weekend in Frankfurt?”


However despite the push to make Paris seem more attractive to international firms, there are some, including the World Bank, who believe the country has a long way to go before it can really rival other global cities for business.


In October the World Bank gave France a reality check in its bid to attract Brexit business.


In its global ranking Doing Business 2017 France was placed down in 29th position for the “ease of doing business”, one lower than the previous year’s position.


While 29 out of 190 doesn’t sound bad, when you consider the likes of Georgia, Macedonia and Latvia are ahead of France, it doesn’t look so rosy.


No disrespect to those countries, but it’s clearly not where France would want to be as it is desperate to see its economy grow and to woo business from Britain.


Ireland ramps up campaign to secure a special Brexit deal

Irish Times


By Pat Leahy

30 January 2017


In a file held on the Government’s secure computer system there is a document containing a list of EU countries.


They are classified according to their resistance to the idea of Ireland securing some sort of special arrangement in the Brexit negotiations which deals with the Border and the “unique circumstances” – a phrase beloved of the Department of Foreign Affairs – of the British-Irish political, economic and social relationship.


They are not listed as friends or enemies, just as requiring more or less attention as officials and politicians attempt the delicate task of positioning Ireland for the least negative outcome from the negotiations on Britain’s exit from the EU.


The list and the associated intelligence it represents is the product of a diplomatic, political and official campaign that has been taking place since early last autumn.


Hundreds of meetings, contacts and conversations have been conducted by politicians and civil servants with their EU counterparts in Brussels and in European capitals in recent months.


In these they have sought to firstly outline the disproportionately serious consequences of Brexit for Ireland, and then to explain why solutions proposed by Ireland will not offend other member states’ interests or EU norms.


Senior officials and political sources who spoke to The Irish Times on condition of anonymity detailed an extensive campaign under way to manage Brexit that one senior mandarin likened to a cross between running the six-monthly EU presidency and implementing the Troika bailout.


Except on this occasion, there is no clear destination.


Sixth time


Last Thursday the Cabinet sub-committee on Brexit met for the sixth time in Government Buildings.


The meeting went on for two hours, and the politicians and senior officials there were presented with a series of documents, some of which have been seen by The Irish Times, which detailed the progress so far and the objectives for the coming months.


On Monday the Taoiseach meets the British prime minister Theresa May, and next week he will travel to Poland. Shortly after that Mr Kenny will travel to The Hague.


The work is mainly divided between the Department of Foreign Affairs and the Department of the Taoiseach.


In Iveagh House, the headquarters of the Department of Foreign Affairs, the key figures are Rory Montgomery and Adrian O’Neill, head of the Anglo-Irish division, and the secretary general Niall Burgess.


In Government Buildings, the second secretary general, John Callinan, leads the Brexit planning, while secretary general Martin Fraser – the State’s most senior civil servant – oversees how Brexit preparations influence the work of the Cabinet and the Cabinet committees.


In official circles there is some bemusement at accusations that “nothing is being done” to prepare for Brexit.


If anything, some officials say, some important work is being neglected because there is so much internal focus on Brexit.


In recent times, Irish officials have been flying to meetings around Europe to explain why they believe the retention of the Common Travel Area after Brexit would not be in contravention of EU law.


Last week, they were in Paris where a team of high-ranking officials and diplomats held a lengthy series of meetings over several hours with their French counterparts discussing a range of Brexit-related issues.


The Irish position is that the Common Travel Area – legally and practically – can continue completely independently of Britain’s decision to leave.


The officials have conceded it would result in Irish citizens enjoying rights and entitlements in the UK – the right to reside permanently, work and avail of public services, for example – that will not be automatically available to other EU citizens.


However, they have been pointing out that this was the case long before EU membership, and have been arguing strongly that this will not violate European law.


“That’s the law. Though the politics can be different,” says one person involved in the process.




The response, insiders say, has been largely but not uniformly positive on the Common Travel Area.


Officials and politicians believe that most EU countries will not object to the proposals that will come from the Irish Government, though others may be more problematic.


They are tight-lipped about where the problems are likely to be – the list is a closely guarded secret – though official gossip suggests that some central and eastern European countries are proving sticky.


“We are getting some nervousness alright,” says a source.


Another source says that it is not so much that the newer member states in the east are not sympathetic but that they do not have the same familiarity with the Irish situation accumulated over the decades as the older EU members.


Officials say that everyone is annoyed with the British. But some are more annoyed than others.


“A lot of countries don’t have big trading interests with the UK. Some are still using the word ‘punishment’,” says one senior official.


This is a problem for Ireland because it is clear that Ireland’s interests coincide with British objectives to a large degree – not something that Ireland will stress but something which the others can probably work out for themselves.


Ireland wants as close a trading relationship between the UK and the EU as possible after Brexit.


The last thing Ireland wants is for Britain to be “punished”. That will lead, sources expect, to differences on the EU side of the table between Ireland and some of the other member states.


Ministers stress at every opportunity that Ireland is on the EU side of the table. But it is likely to have differences with some member states.


Constant contact


There is constant contact with the British government.


Despite the clear position – they sound at times like instructions – emerging from Brussels (repeated again last week by visiting economic affairs commissioner Pierre Moscovici) that there should be no negotiations with the British until article 50 is triggered, Irish Government officials are involved in pretty much a rolling conversation with their British counterparts.


Senior official contact was formalised in 2012 when an annual meeting between top mandarins in both governments was instituted (it was in London last October), but, more importantly, people have the email addresses and mobile numbers of each other.


“We’re not negotiating. But we are in constant touch with them, yes,” says a high-ranking source involved in the contacts with the British.


“We accept the rule on no negotiations. But you have to explore the issues. We don’t regard it as a breach of the rule.”


So what has all this activity produced so far?


Officials are satisfied that the Government appears to be making good progress on the retention of the Common Travel Area.


Word has reached Irish Embassies around the continent that Michel Barnier speaks about it as an early priority in the negotiations when he is speaking to other governments.


However, the question of EU-UK relations – and, therefore, British-Irish trade and the role of customs at the Border – remains deeply uncertain.


Senior sources say that the pretty broad EU view is that trade is an EU competence, and if and when the British do exit the customs union then the arrangements with Ireland will be the same as the arrangements with the rest of the EU. If that involves tariffs, it involves tariffs.


There will be, officials expect, some EU understanding about how the Border should work in the future, with other countries understanding the Irish position that it should be as soft or invisible as possible.


There may even be some local arrangements for agricultural products that cross and re-cross the Border, speculates one source.


But a special arrangement for Ireland on trade seems very unlikely.


Unique position


“The idea that Ireland has a unique position on trade is not really being entertained,” says one senior figure.


That will mean a significant economic impact in Ireland. But it will also affect the broader relationship between Ireland and the UK.


The ties will not be undone, but they will change and economically they will loosen.


In their idle moments, the officials tasked with managing all this sometimes wonder about the magnitude of it all.


One senior figure suggests that Brexit could result in “potentially quite fundamental shifts” in both the relationship between the North and the South, and the relationship between Ireland and the UK.


“It’s going to change the world we live in,” he says. “That’s the reality, that we have to accept.”


Brexit effect will fill Dublin office boom

The Times


By Peter O’Dwyer

6 February 2017


Office space in Dublin is set to boom this year but the Brexit effect will ensure that the space is not wasted, research has indicated.


HWBC, the commercial real estate agency, said that it expected companies to move to Ireland, eliminating any risk of the oversupply problems that had dogged previous property cycles despite the sharp rise in such space due for completion this year.


Completions are expected to increase by 184 per cent with a total of 2.3 million square feet expected to become available.


Tony Waters, managing director of HWBC, said that a “strong pipeline” of potential movers to Dublin from London after the Brexit vote should be more than sufficient to meet the increase in supply.


“There is potential for up to five million square feet of office space to be delivered in Dublin over the next few years with schemes at various stages of the planning process. However, much of this space will not be delivered without significant pre-lets in place, so at current levels of construction we see no risk of oversupply as happened in previous cycles,” he said.


Rents are set to rise by 8 per cent — in line with last year’s increase of 9 per cent — as a more modest level of growth continues, according to HWBC.


Between 2012 and 2015 the Dublin office market rebounded strongly with double-digit rent increases. Rents doubled since their lowest point in 2012.


Further demand should help drive prime rents up by another 8 per cent to €65 per square foot by the end of the year.


“Whilst rental growth in the office market in Dublin has eased from the double-digit levels of 2012 to 2015, prime office rents rose by a very respectable 9 per cent and will grow by a similar level in 2017, helped by the Brexit demand that is clearly now coming through with plans to expand in Dublin by investment banks like Barclays and Credit Suisse emerging in recent days,” Mr Waters said.


“Demand may come from companies moving 100 or 200 staff rather than moving thousands but it will still have a very positive impact given the supply constraints in the market.”


Paul Scannell, director at HWBC, warned, however, that a lack of suitable housing in Dublin could scupper the flow of foreign direct investment into Ireland in the coming years.


External threats such as President Trump’s protectionist trade policy and the uncertainty surrounding elections in France and Germany this year could potentially rock the Dublin market but a lack of housing is the most pressing concern in the market, he said.


“The minority government must address the challenges in the residential property market, where a lack of new supply and rental accommodation at affordable rates could have negative consequences for winning Brexit business and foreign direct investment,” Mr Scannell said.


HWBC’s research also showed that the office vacancy rate at the end of December stood at 7.8 per cent compared to the peak rate of 22.8 per cent in 2010 and 9 per cent at the end of December 2015.


The average deal size for new leases last year was 1,200 square metres, with 201 transactions taking place in 2016. Amazon committed to 171,000 sq ft in the Vertium Building on Burlington Road and Grant Thornton agreed to take up 104,000 sq ft in City Quay development in Dublin 2.


Germany is the top destination for companies relocating due to Brexit: EY



By Karen Gilchrist

31 January 2017


Global investors with operations in the U.K. looking to relocate have identified Germany as the top destination following Britain’s decision to leave the European Union, according to the latest EY study.


Brexit has caused global investors to reassess their assets in the U.K., with 14 percent of foreign investors with a presence in the U.K. saying they now plan to change or relocate some of their European operations in the next three years should the U.K. leave the single market.


Germany was identified as the preferred destination for those investors moving out of the U.K. (54 percent), followed by the Netherlands (33 percent) and France (8 percent).


Already, seven in ten foreign investors say they have been impacted by Brexit, particularly with regards to operating margins, purchase costs and sales.


The financial services industry has been one of the hardest hit by the vote and remains the least optimistic about the outlook ahead. Just 12 percent say they anticipate strong growth while 6 percent are expecting to “slightly reduce” their existing presence in the region.


Earlier this month, UBS and HSBC warned that they could each move about 1,000 jobs out of the U.K. as they prepare for trading disruption.


According to EY’s study, Brexit and European Union stability were cited as more fundamental concerns for financial services firms than for manufacturing firms.


The study also found global investors plan to grow their presence in Europe over the coming years despite recent geopolitical uncertainty that has dominated the region.


The findings in fact note an uptick in investor sentiment over the past year, and in particular since the U.K.’s shock Brexit vote, going some way in dispelling wider concerns about the impact of political upheaval on underlying investment behaviour.


EY’s study of 254 global investors found that more than half – 56 percent – say they plan to grow their exposure to Europe over the next three years. This is up from May 2016, one month prior to Brexit, when just 36 percent of Europeans said they were optimistic about the future of Europe.


The results come as leadership races heat up in the Netherlands, France and Germany and Britain comes forward with greater details on its impending departure from the EU.


While not entirely unfazed by the political landscape, of greater concern to investors is volatility,particularly with regards to currencies, commodities and capital markets. 37 percent said these fluctuations posed the greatest risk to their investment decisions, while economic and political instability within the EU (excluding Brexit) worried 32 percent and Brexit itself concerned 28 percent.


Andy Baldwin, EY area managing partner for Europe, Middle East, India and Africa, said the findings were reassuring but warned against complacency.


“It is encouraging that the investors we are tracking continue to have strong investment appetite in Europe despite the instability and mixed geopolitical environment. However, investor patience is finite. Europe’s historical investor appeal was built on certainty and predictability.


“Europe is in danger of developing an emerging market ‘geopolitical risk profile’ without commensurate returns. For the foreseeable future, pure economic factors will vie alongside political considerations in influencing final investment decisions.”


Brexit: Germany’s financial capital plans to welcome 10,000 UK bankers



By Sam Meredith

3 February 2017


Frankfurt expects up to 10,000 financial industry workers to relocate from Britain to Germany’s banking capital as a consequence of Brexit, according to a Frankfurt lobby group.


“We’re going to benefit most,” Hubertus Vath, managing director at Frankfurt Main Finance, told reporters in London on Thursday.


“Within the eurozone you need to be in Frankfurt to service the area,” he added.


Several U.K. based banks are poised to announce at least part of their business operations are being moved from London to another European city, with countries on the continent scrambling to attract top financial officials.


City lenders are attempting to maintain their services throughout the bloc as the U.K. begins its withdrawal from the European Union (EU).


Brexit negotiations have not yet started, however, the U.K. took a step closer to beginning formal negotiations with the bloc as parliament cleared its first legislative hurdle. The U.K. parliament voted overwhelmingly in favor of starting the formal two year negotiation process with the EU on Wednesday.


Britain could be set to complete the legislative process by March 7 which would meet Prime Minister Theresa May’s self-imposed April deadline.


UK has 80% of EU ‘high earners’


Angela Merkel’s financial powerhouse has been touted as a potential relocation hotspot for London’s bankers given it can boast somewhat of a financial hub given its significant euro flows and the presence of the European Central Bank.


However, Frankfurt is reasonably small in size, has a relatively unexciting reputation and must compete with several other European cities. Paris is a key competitor of Frankfurt although smaller cities such as Amsterdam, Dublin and Luxembourg are also vying to lure banks, insurers and fund managers throughout Brexit negotiations.


The U.K. reportedly has over 80 percent of the continent’s “high earning” financial professionals, according to the latest research by the European Banking Authority.


Britain boasts 4,133 of the 5,124 bankers, fund managers and compliance professionals across the EU that earned over 1 million euros ($1.07 million) in 2015, according to the new research.


The European Banking Authority is based in London although has announced it would leave its office post-Brexit.


Brexit: Angela Merkel warns Theresa May over slashing taxes to undercut the EU



By Rob Merrick

3 February 2017


Angela Merkel has hit back at Theresa May’s threat to slash taxes to undercut the EU if it blocks a Brexit deal, warning taxes are the price paid for a just society.


The German Chancellor insisted her country had no intention of joining a race to the bottom, by following in the footsteps of Britain and Donald Trump.


“We have a tax system in Germany that has weathered challenges well. I see no reason for entering a race for who has the lowest corporation tax,” she said.


“We need tax revenues, we need a fair tax system, in order to make necessary investments in our society.”


Her rebuke came as EU leaders, angered by the new US President’s outright hostility to the bloc, made clear that the Prime Minister’s pitch to be a “bridge to Trump” – particularly over bolstering Nato – was not welcome.


The controversy over tax blew up at the EU summit in Malta after the Prime Minister said she would “change the basis of Britain’s economic model” if she failed to get her way in the withdrawal negotiations.


The comment was widely seen as a threat to turn the UK into an offshore rival to the EU, slashing taxes and regulations in order to lure reluctant foreign investment.


But the UK’s corporate tax rate is already set to fall to 17 per cent – below the EU average – raising accusations that it would have to become a fully-fledged tax haven to offset the damage from Brexit.


Revenues would plunge, critics say, at a time when the NHS is already in crisis and schools are facing spending cuts.


At a press conference in Malta, Ms Merkel was asked if Germany would “follow suit” if Britain and America carried on cutting business taxes – making clear it would not.


Ms Merkel did not answer when asked if Ms May had become “too close” to Mr Trump, after visiting the White House within one week of his inauguration.


The two leaders had not discussed the US President, she said – despite chatting on a lengthy walkabout during a break in the summit talks.


Downing Street was forced to deny a snub after formal post-lunch talks between the pair – tipped to be a highlight of the summit – were mysteriously cancelled, insisting all issues were covered in their short walkabout.


Ms Merkel said she was “gratified” that the Prime Minister had said she wanted to see a “strong EU”, even after Britain had left.


And she backed Ms May’s call for EU countries to spend more on defence, in return for what the Prime Minister has claimed is Mr Trump’s “100 per cent” commitment to Nato.


“We need to invest more in our defensive capabilities,” Ms Merkel said.


“There was a very clear commitment around the table towards Nato – and the American administration, meanwhile, has also come out with this commitment.”


Downing Street said the Prime Minister had, over lunch in Malta, raised her recent talks with Mr Trump, “urging other EU leaders to work patiently and constructively with a friend and ally”.


A spokeswoman said: “She said that the alternative – division and confrontation – would only embolden those who would do us harm, wherever they may be.”


Earlier in the day, other EU leaders had rebuffed the Prime Minister’s offer to be a “bridge” to the President, with French President François Hollande saying: “It is not about asking one particular country, be it the UK or any other, to represent Europe in its relationship with the United States.”


Meanwhile, Dalia Grybauskaite, the Lithuanian President, gave a sarcastic verdict, saying: “I don’t think there is a necessity for a bridge – we communicate with the Americans on Twitter.”


However, European Council President Donald Tusk was conciliatory about Mr Trump, saying: “What we need is as strong transatlantic friendship and relations as possible, and the UK can, inside Europe or outside Europe, the EU not Europe, can be very helpful.”


Ms May’s hopes for an early deal on the rights of British citizens living in the EU after Brexit were also given a boost, when Spain’s Prime Minister Mariano Rajoy agreed one was needed.


Nevertheless, Ms May’s strategy to go to the summit brandishing her coup in meeting Mr Trump first – apparently hoping to strengthen her hand in the Brexit talks – appeared to have backfired.


She carried the message from the new President that Europe must increase its defence spending in return for his “100 per cent” commitment to Nato.


But other EU leaders view the American leader with horror because of his hostility to the EU, his protectionism and controversial policies such as the travel ban from seven mainly Muslim countries.


Mr Hollande openly dismissed the idea of Britain as a bridge, pointing to Mr Trump’s welcoming of Brexit and insisting he should “not get involved”.


He said: “He may have his own views, but it is up to Europe to decide how many members there should be, and who should leave.”


And Joseph Muscat, the Prime Minister of Malta – which holds the six-month presidency of the European Council – said it was time for the EU to “lead at a global level”.


“We cannot stay silent where there are principles involved. As in any good relationship, we will speak very clearly where we think that those principles are being trampled on,” he said.


Tim Farron, the Liberal Democrat leader, ridiculed Downing Street’s insistence that Ms May and Ms Merkel had discussed all they needed to.


“I cannot imagine Theresa May seriously thinks a bit of polite chit-chat through the streets of Valletta replaces a serious bilateral meeting,” he said.


To add to the sense of her isolation – and in a signpost to the future – Ms May left the Maltese capital early, leaving the other leaders to continue the summit without her.


Fund management firm opens Dublin office to combat Brexit uncertainty

City A.M.


By William Turvill

30 January 2017


A Luxembourg-headquartered fund management company today announced plans for a Dublin office, in a move prompted by the UK’s Brexit vote.


FundRock, which has 70 staff in Luxembourg, is also due to move into the UK with the acquisition of Fund Partners, subject to regulatory approval.


It is understood that Ireland was chosen as a new office location in light of the Brexit vote. It was chosen because of its legal system, the English language and its business environment.


“There is significant uncertainty around the future of Single Market access,” Ross Thomson, head of the Dublin office, told City A.M.


“The solution FundRock offers now removes the uncertainty and provides clients with options and solutions insulated from geopolitical uncertainty and allowing clients to develop their international business in a model that overcomes the potential future barriers


“The current unknown situation around the future of the passporting of financial products means they FundRock can offer solutions to UK-based firms if the passport is lost.”


He added: “FundRock has already had numerous discussions with UK-based managers and have implemented a working group to monitor the situation closely and assist at each step of the process when article 50 is triggered.”


The Dublin office will initially have three staff, but will be seeking growth this year.


CITY MINISTER: ‘It’s in Europe’s interests that London remains strong and competitive’

Business Insider


By Oscar Williams-Grut

5 February 2017


Britain’s financial services minister said the UK is in “a strong position” for Brexit negotiations and the government will push to “maximise the access” to the EU market.


Economic Secretary to the Treasury Simon Kirby told Business Insider: “It’s in Europe’s interests that London remains strong and competitive, as much as the UK’s.


“60% of European capital market business is conducted through the UK, banks in the UK are the largest borrowers and lenders of euros outside of the eurozone and when we talk about critical mass, when you look at the London Stock Exchange Clearing House, they’ve estimated that critical mass, that size of business, saves some £17 billion a year.”


Kirby, who’s main portfolio is financial services and the City, was speaking to BI the day after the Guardian reported on a leaked EU report suggesting Europe could suffer unless it gets a “workable” deal with the City as part of Brexit negotiations.


Kirby told BI at his Westminster office: “I am aware that there is a job to be done and the negotiations will be hard and will be difficult. However, I think we’re in a strong position and I’m confident that the future has many opportunities.”


‘We’ll want to maximise the access’

Two of the biggest Brexit issues in the City have been the possible fate of euro clearing and financial passporting.


European nations, particularly France, are keen to strip Britain of its ability to settle trades done in euros after Brexit goes through. London clears 70% of euro-based deals, according to Sky News, worth an estimated $570 billion (£460.9 billion, €511 billion) daily.


Kirby, the MP for Brighton Kemptown since 2010, told BI: “I’ve been very clear in the house that it’s an important thing, we don’t intend to lose it and I’m confident that we can retain it. But it will be part of the negotiations and we’ll have to wait and see how we progress. But we do well and it’s in Europe’s interests as much as the UK’s to make sure that that clearing doesn’t move to New York.”


Financial passporting refers to banks’ ability to sell products and services across the eurozone from locations in Britain using one licence. The government plans to pursue a “Hard Brexit”, breaking all contact from the eurozone. This has led to an acceptance in the finance community that Britain is willing to lose passporting rights.


However, Kirby signalled that the government will fight for access, saying: “We’ll want to maximise the access, not only for British companies to do business in Europe, but also so European companies can come here. There are many different ways that this can be delivered.


“There’s huge speculation, there’s a huge number of different adjectives used to describe Brexit. What the Prime Minister has been very clear about is we will pursue a bold and ambitious free trade agreement with the EU.”


He added: “What we want to see is no cliff edge and a smooth and orderly solution. I’m confident that we will get there. If you want me to speculate on specific detail, I’m not in a position to do that, only to say that ministers have met and listened to a large number of businesses over the last couple of months and we’re quite clear on access being top of the list [of businesses’ priorities].”


‘There is a spectrum of opinion’

Several investment banks have signalled will move thousands of jobs away from the UK as a result of the prime minister’s decision to pursue a clean break from the EU.


Kirby highlighted that while the loss of investment banking jobs would be difficult for the UK, financial services are broader than simply investment banking and other constituents have different priorities.


He said: “The thing to bare in mind about financial services is they are a broad spectrum. You’re challenger bank or building society might have a different opinion to some of the more established banks. Insurance companies might have a different opinion to fund managers. There is a spectrum of opinion. There are many people who see opportunities, other people quite rightly have important issues that need to be resolved.


“I think there is a general sentiment in the City that London will continue to be the global hub that it has been. All the things that make it an attractive place to do business will continue and the government’s in a good position to negotiate the best possible deal.”


Kirby, who was appointed City Minister in July 2016 as part of Theresa May’s first cabinet, was a businessman prior to entering politics. He helped set up Brighton radio station Surf 107 before setting up a chain of pubs and restaurants in the area.


Brexit ‘an opportunity,’ but EMA likely to leave London, says AstraZeneca

Fierce Biotech


By Ben Adams

2 February 2017


The executive team from AstraZeneca met this week with the U.K. government to discuss the country leaving the European Union, as its CEO says there are “opportunities” from the so-called Brexit vote as it appears “logical” for the European Medicines Agency (EMA) to leave its current London home after the U.K. pulls out of the union.


In its financials this morning, Pascal Soriot said that, of course, talks with Europe on what Brexit will be haven’t happened yet, so there is still a lot of uncertainty. “But it is logical to assume that the EMA will have to stay in Europe, and that the U.K. will have to have its own agency, but I think here this can work quite well actually, provided that several things happen,” he said on a call.


“One is that the U.K agency works proactively with the EMA […] and work to recognize each other’s approvals. The second would be that the U.K agency would be agile and focused on innovation, as well as new technology and products, and in doing so could actually support the introduction of new technology.”


This echoes the U.K.’s health secretary Jeremy Hunt, who a few weeks’ back told a health committee: “The EMA is an EU institution. I think it’s likely EU countries will want to move its headquarters outside the U.K.”


This comes a few months after fellow U.K. Big Pharma CEO, the out-going Sir Andrew Witty, warned of “tremendous disruption” if the EMA left town.


Sir Andrew was worried that moving the EMA and its 900 staff members from London to another European city post-Brexit will cause upheaval that affects the smooth running of the regulatory machinery.


On the impact of Brexit on his company and the industry, Soriot said: “As business people, once a decision has been made, whether you like it internally or not, you have to look for the opportunities and make the best of it.


“And I actually do think there are opportunities for the country, for the industry and for our company [on Brexit], and I think that the [U.K.] government is very committed to developing an industrial policy, and in particular one for life sciences.”


He said there have been in recent weeks statements on R&D as well as investment from the government in academic science that are all positives, and financial commitments in the manufacturing sector.


“This is important,” he says, “and I can tell you the industry, and us as a company, we have had very rich dialogue with the government as recently as this week. There is a very good and very strong, collaborative spirit, and from our point of view in the science and regulatory sense, I think we can do great things.”


General Brexit news:


City lobby group comes out fighting for global Brexit in dramatic u-turn



By Tim Wallace

31 January 2017


The City’s top lobby group has performed a dramatic u-turn on Brexit, scrapping its previous campaign to remain in the EU and instead hailing the vote to leave as “unprecedented opportunity” for the UK to develop a powerful new set of trade and investment policies.


The group, which represents banks, finance firms and the professional services industry, now believes that Britain’s departure from the EU represents “a once-in-a-generation opportunity” for a strategic re-think of commercial relationships with the rest of the globe.


Before the EU referendum the organisation had planned for a way to cope with Brexit just in case voters chose to leave the group of 28 nations.


But the new proposals are more than just an effort to make the best out of Brexit – in an apparently major conversion, the group actively points out the ways in which EU membership has proved to be a “straitjacket” in terms of global trade, holding Britain back from building relationships with non-EU nations.


The group declared: “TheCityUK is a strong believer in the potential opportunities that the UK’s departure from the European Union will offer.”


It calls for a wholesale rethink of trade policy to focus on the services sectors which make up the bulk of the British economy, rather than the physical goods which are the focus of many trade negotiations.


“It reflects the fact that there was a vote to leave the EU and as a result there are a whole range of challenges and opportunities, said Gary Campkin, director of policy and strategy at TheCityUK.


“An area of opportunity in leaving the EU is the opportunity for first time in 40-plus years to have an independent trade and investment policy.”


This should include an intensive study of the value of trade in services and the makeup of global demand so that the government is fully informed, the group said, as well as a renewed focus on emerging markets which received less attention within the EU.


“In many ways global rules on services trade have lagged behind those on manufactured goods and agriculture,” Mr Campkin said.


He wants to see “a concerted effort led by UK and other like-minded countries to modernise, update and ensure the rules that govern services trade reflect the way services trade is done today. We will be absolutely freer to do it outside the EU.”


He noted that while the UK exports financial services to the EU very successfully, “over the next 10 to 15 years, 90pc of global economic growth is expected to be generated outside Europe and these markets – developed and emerging – must be a priority focus for the country post-Brexit.”


To truly go global TheCityUK wants the government to liberalise trade on a unilateral basis, as well as striking bilateral trade deals and regional agreements, in a frenzy of activity to build ties around the world.


“The Prime Minister has signalled her commitment to striking the best trade deals around the world post-Brexit,” said Mr Campkin.


“While existing key commercial links will be maintained, there are significant opportunities for trade and investment policy to be varied in innovative ways, breaking away from the legacy of past practice set by the EU.”


And while foreign direct investment into the UK has traditionally come from large, rich countries, “the rise of the BRICS, notably China and India as exporters of capital means that the UK will need to develop an investment regime that will take account of a wider spread of sources of inbound FDI,” TheCityUK said.


As part of this drive Britain will need to challenge the rise of protectionism in other countries, the document advises.


That includes plans in other countries to protect specific industries or attempt to force firms to employ staff domestically rather than trading internationally.


And Britain should also take disputes to the World Trade Organisation covering very modern forms of protectionism, the group said – for instance, challenging governments’ efforts to force companies to keep data stored in any particular country or jurisdiction.


The UK should work to take a leading role in global regulation, making the market in finance and other services more even and open, helping create more markets for British industries.


And Britain should  make the case for more open borders globally, benefitting the UK as it will be able to access the best talent from around the world, and benefitting British citizens as they will have more opportunity to find the best jobs and to trade globally, the report argues.


Business leaders say Brexit already having negative effect

Financial Times


By Sarah Gordon and George Parker

5 February 2017


Business is already suffering from Brexit, according to some of Britain’s biggest companies, lending weight to a cross-party effort by MPs this week to avert the risk of the UK crashing out of the EU without a deal.


Despite a stream of positive economic data, an Ipsos Mori survey of senior executives from more than 100 of the largest 500 companies found that 58 per cent felt last year’s referendum result was already having a negative effect on their business.


Just 11 per cent found the Brexit decision had meant a positive impact while nearly a third — 31 per cent — thought it had made no difference to their company.


“Business in this country is already feeling the pain of the economic upheaval of leaving the EU,” said Ben Page, chief executive of Ipsos Mori. “There is no sign that this is likely to ease this year.”


Company bosses have voiced concern about losing competitive advantage against European rivals if tariffs rise after Brexit, adding to the cost of producing and exporting goods.


Investors also appear to be waiting for greater clarity about the outcome of Brexit negotiations before committing funds to longer-term projects.


Theresa May will this week face a rebellion by pro-European Conservative MPs who fear that she could walk away from the negotiating table in Brussels without a deal, with potentially serious effects for business.


The prime minister has said she would prefer “no deal to a bad deal”, raising the prospect of Britain leaving the EU to fall back on World Trade Organization rules, including tariffs.


Steve Baker, a Tory Eurosceptic MP, said up to 27 Tory MPs could this week back a “wrecking amendment” in the committee stage of the bill authorising Mrs May to invoke Article 50 and trigger Brexit.


The amendment would give parliament a say if Mrs May concluded that no deal was possible, in effect requiring her to go back to Brussels to seek better terms. She will order Tory MPs to oppose the measure.


For Labour, the agony over Brexit continues, with Jeremy Corbyn facing the prospect of losing two of his closest allies — Diane Abbott and Clive Lewis — if they defy him and vote against the Article 50 bill on its third reading on Wednesday.


Mr Corbyn said he had yet to decide whether to impose a three-line whip requiring Labour MPs to back Brexit, but hinted he would show clemency to rebels in any event: “I am a very lenient person,” he told Radio 4’s The World this Weekend.


The Commons battles over Brexit have been played out against a benign economic backdrop, confounding those who predicted a downturn after a Leave vote.


The Office for National Statistics reported last month that the UK was the fastest growing economy in the G7 last year, and was not yet showing any signs of the slowdown that many economists predicted would follow the vote to leave the EU in June.


But the less rosy sentiment from business is supported by economic forecasters, with Sir Charlie Bean of the Office for Budget Responsibility and former deputy governor of the Bank of England saying last week that the strong consumer spending seen after the Brexit vote in June was likely to fall away in coming months.


BoE figures show that consumer borrowing growth in December slowed to its lowest in more than two years, while consumer confidence has also dipped.


Two-thirds of the 114 FTSE 500 business leaders surveyed believe the business environment will become more negative over the next 12 months, while only 13 per cent believed the opposite.


A large majority — 84 per cent — said it was “vital” to their business that the government handled Brexit negotiations well. Half said they were not confident in the government’s ability to negotiate the “best deal possible” with the EU for UK companies.


A large majority — 96 per cent — was confident their business could adapt to the consequences of leaving the EU, and more than two-thirds had already taken action in response to the referendum result. A tenth were moving business outside the UK.


In terms of their priorities for the forthcoming negotiations, the business leaders said movement of labour and access to skilled labour came the highest, followed by securing free trade or retaining the single market with the EU and passporting rights.


The interviewees said that to be successful in a post-Brexit UK, they wanted the level and complexity of regulation to be reduced and for it to still be easy to recruit EU staff.


BREXIT BANKING BOOM: US financial GIANT ‘starts search for new London headquarters’



By Harry Walker

5 February 2017


According to reports, Bank of America Merrill Lynch has hired property agents CBRE to seek out ideal sites in London as large as the 500,000 square feet in which its European base currently operates.


The possible move is likely to increase faith that London can remain the financial hub of Europe once the Brexit process is complete.


This comes in stark contrast to warnings from Remoaners and the Project Fear campaign of last year that claimed an exodus of financial services out of London to cities such as Paris or Frankfurt would happen to ensure the access of firms to the European single market.


Despite the fact contingency plans have been put in place by major firms to deal with the fall-our from Brexit, most businesses are waiting until Theresa May triggers Article 50 to see what kind of deal London will strike with Brussels.


Meanwhile, businesses are growing confident that Britain will remain an attractive base for companies spanning a variety of industries once it has left the EU, with a number of large companies announcing plans to expand operations in the capital.


Tech giant Apple last year announced it would set up shop at the Battersea Power Station development to build a new London headquarters big enough to house 3,000 staff.


Google is currently building a 10-storey, 650,000 sq ft complex in the capital.


And Facebook is planning to move to new offices in London’s Fitzrovia district, which is expected to create an extra 500 jobs for British workers in the UK.


The Sunday Telegraph reports BAML contacted CBRE to start an office search before last year’s EU referendum.


The decision to press on with the search is a huge vote of confidence for British business in the face of Brexit.


In a worst-case scenario, HSBC and UBS have said they could move 1,000 jobs out of the UK, and Barclays is considering bolstering its small presence in Dublin.


But BAML’s European boss Alex Wilmot-Sitwell said after last year’s historic vote he was “very confident” the bank could draw up a strategy to protect its business in Europe before Brexit comes into affect. has contacted BAML regarding these reports.


Brexit: MPs overwhelmingly back Article 50 bill



1 February 2017


MPs have voted by a majority of 384 to allow Prime Minister Theresa May to get Brexit negotiations under way.


They backed the government’s European Union Bill, supported by the Labour leadership, by 498 votes to 114.


But the SNP, Plaid Cymru and the Liberal Democrats opposed the bill, while 47 Labour MPs and Tory ex-chancellor Ken Clarke rebelled.


The bill now faces further scrutiny in the Commons and the House of Lords before it can become law.


The prime minister has set a deadline of 31 March for invoking Article 50 of the Lisbon Treaty, getting official talks with the EU started. The bill returns to the Commons next week.


MPs held two days of debate on the bill, which follows last June’s referendum in which voters opted by 51.9% to 48.1% in favour of Brexit.


Foreign Secretary Boris Johnson, a leading Leave campaigner, called the Commons result “absolutely momentous”. Speaking on Facebook, he added: “We may be leaving the EU treaties. We are not leaving Europe.”


The UK would “forge a new identity” and make “an amazingly positive contribution” to Europe, he said.


Labour leader Jeremy Corbyn had imposed a three-line whip – the strongest sanction at his disposal – on his MPs to back the bill.


Shadow cabinet members Rachael Maskell and Dawn Butler quit the party’s front bench shortly before the vote, in order to defy his orders.


Also, 13 Labour frontbenchers voted against their own party position, apparently without first resigning.


Mr Corbyn said: “Labour MPs voted more than three to one in favour of triggering Article 50. Now the battle of the week ahead is to shape Brexit negotiations to put jobs, living standards and accountability centre stage.


“Labour’s amendments are the real agenda. The challenge is for MPs of all parties to ensure the best deal for Britain, and that doesn’t mean giving Theresa May a free hand to turn Britain into a bargain-basement tax haven.”


One MP was heard to shout “Suicide” when the result of the vote was announced.


‘Detailed questions’


Liberal Democrat leader Tim Farron, seven of whose nine MPs voted against the government, said: “The Tories and Labour have failed future generations today by supporting a hard Brexit.


“Labour’s leadership tonight have waved the white flag. They are not an opposition; they are cheerleaders.”


MPs will discuss the bill in more detail next week when it reaches its committee stage in the Commons, during which amendments to the government’s plans will be discussed.


The SNP’s foreign affairs spokesman at Westminster, Alex Salmond, said: “Next week there will be detailed questions and the calibre of the government will be judged by how they respond to the amendments.”


Plaid Cymru’s Westminster group leader, Hywel Williams, called Labour’s stance “deeply disappointing”, adding: “This was not a vote on whether to accept the referendum result. It was a vote on whether to endorse the Tories’ extreme version of Brexit.”


Ken Clarke, the only Conservative MP to defy his party by voting against the bill, said the result was “historic”, but the “mood could change” when the “real action” of negotiations with the EU starts.


Earlier, the Commons voted against an SNP amendment aimed at scuppering the bill.


The bill was published last week, after the Supreme Court decided MPs and peers must have a say before Article 50 could be triggered.


It rejected the government’s argument that Mrs May had sufficient powers to trigger Brexit without consulting Parliament.


Talks with the EU are expected to last up to two years, with the UK predicted to leave the 28-member organisation in 2019.


Brexit white paper: key points explained

The Guardian


By Jon Henley

2 February 2017


A day after parliament voted overwhelmingly to give Theresa May the power to trigger article 50, the government presented MPs with its formal policy paper setting out how the UK proposes to leave the EU.


Here are the key points of the Brexit white paper, which essentially builds and expands on May’s Lancaster House speech last month. It amounts to a list of objectives, many of which will not necessarily be easy to achieve.


Sovereignty, great repeal bill and control of UK laws

The paper says the British parliament has been sovereign throughout the UK’s EU membership, “but it has not always felt like that” – a striking comment.


It says the government will bring forward a separate white paper on the great repeal bill, which was first announced by May in her Conservative party conference speech last year to remove the European Communities Act of 1972 from the UK statute book and convert the body of existing EU law into domestic law.


The paper confirms that “wherever practical and appropriate” the same rules and laws will apply in the UK on the day after it leaves the EU as did before.


It also confirms that the government intends to “take control of our own laws”, which will mean “bringing to an end the jurisdiction of the European court of justice in the UK” and establishing a new mechanism for resolving future disputes between the UK and the EU.


The union and Ireland

The paper says the government will “work with the devolved administrations on an approach to returning powers from the EU that works for the whole of the UK and reflects the interests of Scotland, Northern Ireland and Wales” but does not go into specifics.


It also promises that no decisions currently taken by the devolved administrations will be taken away from them, and indeed that more decisions will be devolved (it does not say which). And it says it will pay particular attention to the Isle of Man, Channel Islands and Gibraltar, all of which have unique relationships with the EU.


On the island of Ireland and the common travel area with the UK, the paper notes the UK and Irish economies are “deeply integrated” and says the government will work to “develop and strengthen” those ties after Brexit.


It says it aims to retain “as seamless and frictionless a border as possible” between Northern Ireland and the Republic, and wants Irish and UK citizens to be able to continue to move freely north-south and east-west, “while protecting the integrity of the UK’s immigration system”. Again, it does not say how.


Immigration and reciprocal citizens’ rights

On the rights of EU nationals living in the UK and vice versa, the white paper goes no further than May’s speech.


It says securing their status is “one of this government’s early priorities for the forthcoming negotiations” and reiterates that “the UK remains ready to give people the certainty they want … at the earliest opportunity”. (The EU-27 have always seen this as part of article 50 negotiations).


It says it is consulting with expatriate groups abroad and EU businesses and other groups “to ensure we understand their priorities”, and “recognises the priority placed on easy access to healthcare by UK nationals living in the EU” – a key concern of many, particularly pensioners.


On controlling immigration, the paper offers no clarity. It says the government is “considering very carefully” the options open to it and working to “understand the impacts on the different sectors of the economy and the labour market”.


Businesses and communities will be able to contribute their views, it says, and suggests – for the first time with regard to immigration – that “there may be a phased process of implementation”, to give companies and individuals time to plan and prepare.


It says EU students can continue to come and study, in the short term at least, but says nothing about future access for EU workers. It also says workers’ rights under EU law will be preserved after Brexit.


EU trade, single market, customs union and budget

The white paper reiterates that the government aims to secure “the freest and most frictionless trade possible in goods and services” with the EU outside the single market and via “an ambitious and comprehensive free trade agreement”.


It also wants to be outside the customs union, so it can negotiate its own trade deals, but would like “a new customs agreement”, which should be theoretically possible thanks to new technology. Again, this does not go further than May’s speech.


We are told once more that the UK will not seek to adopt an existing model used by other countries, but try to “take in elements” of the single market in certain areas – in other words, bespoke deals for important business sectors. From the EU perspective, all this is ambitious: it sounds suspiciously like cherry-picking.


The paper plays up the financial services card, which the government plainly considers a strong one: the EU has a clear interest in “mutual cooperation arrangements”, it says, describing the City as Europe’s only global hub for money, trading and investment on which the EU will continue to rely.


It confirms the UK will leave the Euratom treaty, the legal framework for nuclear power, but says a new relationship will be negotiated, and it says the UK’s future status with EU agencies regulating areas such as medicines, aviation, food safety and financial services will also be part of discussions.


And there will be no more “vast contributions” to the EU budget, as May already said.


Trade with other countries; research

The paper repeats May’s pledge to make the UK a “champion of free trade” and says it will seek bilateral free trade agreements and participate in multilateral negotiations through the World Trade Organisation.


It acknowledges Britain “cannot agree new trade deals until after we have left the EU” – a possible bone of contention with the EU27 – but says there is “much we can do to prepare and to achieve now while respecting our obligations as members”.


It also says work is already under way on establishing Britain’s own schedules covering trade in goods and services at the WTO, aimed as far as possible at replicating those it currently has as an EU member.


The paper also says Britain aims to “continue to collaborate with EU partners” on a key part of its new industrial strategy: science, research and technology. Many academics expect this to become considerably more difficult after Brexit.


Security and crime cooperation

As May has already said, the UK will seek to continue working with the EU “to preserve UK and European security and to fight terrorism and uphold justice across Europe”, the paper says.


It says the government will aim to retain and develop existing cooperation in initiatives like Europol, the European arrest warrant, the Schengen information system, the new EU passenger name records, and the European criminal records information system.


In terms of security and defence, it also promises to “remain committed to European security and add value to EU foreign and security policy” – an offer that may well prove valuable in the exit negotiations.


Orderly exit

The white paper says the government aims to deliver “a smooth, mutually beneficial exit” but says this will require “a coherent and coordinated approach on both sides”. Article 50 will be triggered no later than the end of March, it repeats.


It acknowledges it is “in no one’s interests for there to be a cliff-edge for business or a threat to stability”, saying the government would like “to have reached an agreement about our future partnership” by the end of the article 50 process and repeating May’s suggestion of variable “phased processes of implementation” to give everyone time to plan and prepare for the new arrangements.


The paper also reiterates the prime minister’s remarks that “no deal for the UK is better than a bad deal for the UK” – and suggests that, to mitigate against the impact of not getting the deal it wants from the EU, the government will prepare legislation “to ensure our economic and other functions van continue”.


It does not say what the legislation will contain, or what future economic model the government might envisage.


Goldman Sachs presses Theresa May to protect City post-Brexit

Financial Times


By Martin Arnold and Patrick Jenkins

29 January 2017


Goldman Sachs’ chief executive has emerged as a thorn in the side of UK prime minister Theresa May, warning that European financial centres could challenge London unless her government gives more priority to the City in Brexit negotiations.


The stance was evident when Mrs May met Wall Street bosses at the World Economic Forum in Davos 10 days ago to discuss her strategy for leaving the EU, according to several people briefed on the closed-door meeting.


Lloyd Blankfein, head of the US investment bank for more than a decade, asked Mrs May where financial services ranked in her top three priorities for Brexit, according to the people.


“Blankfein talked tough,” one of the people said. “He said there was no reason why European financial centres can’t set up as effective rivals.”


The Goldman boss mostly asked questions of Mrs May, and delivered them in a light-hearted way, the people said. Despite the cordial mood, some Wall Street bosses in the room detected a deeper concern about the UK’s position in Mr Blankfein’s comments. “There was a particular exchange between them,” said one person.


Goldman was one of the biggest donors to the Remain campaign in last June’s referendum and employs about 6,000 staff in the UK, its main European operation. Mr Blankfein has expressed bemusement to colleagues over how Mrs May appears to treat finance like any other industry, despite its major contribution to the UK economy and its exchequer.


Bankers looked on enviously in October when Mrs May gave Nissan a guarantee that its terms of trade would not be hurt by Brexit, winning a commitment from the Japanese carmaker to expand production at its plant in Sunderland.


Mrs May’s meeting with Wall Street executives came only hours after her address to the Davos elite, outlining plans for the UK to “step up to a new leadership role” in the global economy after Brexit and remain a “great global trading nation”.


Some foreign bank bosses were still reeling from an earlier speech by her in London, in which she confirmed for the first time that the UK would not be staying in the EU’s single market or customs union. City bankers fear this outcome could cut them off from EU clients.


A number of financiers spoke publicly at Davos about their plans to move thousands of jobs out of London as they prepared for a “hard Brexit”, including the heads of HSBC, UBS and JPMorgan Chase.


Mr Blankfein told Bloomberg TV that his bank was already “slowing down” its recent shift of resources to the UK because of the referendum decision. He said immigration had to be Mrs May’s “declared priority” but he believed “the financial services industry is so important to the British economy . . . so that will become an important priority”.


Also meeting Mrs May in Davos were Larry Fink of BlackRock, Stephen Schwarzman of Blackstone, James Gorman of Morgan Stanley, Brian Moynihan of Bank of America and Jamie Dimon of JPMorgan. All parties declined to comment.


Several of the executives came away from the event impressed by Mrs May’s grasp of the detail about how the City could be affected by Brexit. “She is on top of her brief,” said one person involved.


The prime minister also had a one-to-one meeting with Mr Schwarzman to discuss the best way to approach Donald Trump, ahead of her meeting with the new US president last Friday.


The Blackstone boss chairs Mr Trump’s new strategic and policy forum, which provides the president with advice from US business leaders.


Brexit: Fresh legal challenge blocked by High Court



3 February 2017


A fresh legal challenge to Brexit has been blocked by the High Court.


A group of campaigners who want Britain to stay in the EU single market argued that Parliament must approve the UK’s exit from the European Economic Area.


But the judges refused to give the green light for the challenge, saying the judicial review was “premature”.


The Supreme Court ruled last month that Parliament must have its say before the government can trigger Article 50 and begin official talks on leaving the EU.


Parliament is in the process of considering legislation which would give Theresa May the authority to notify the EU of the UK’s intention to leave by the end of March.


MPs overwhelmingly backed the bill on second reading on Wednesday.


The latest legal challenge was brought by supporters of a so-called “soft Brexit” – which would see the UK remain a member of the EU’s internal market.


‘Legal certainty’


They include Peter Wilding, chairman of the pro-Europe pressure group British Influence, and lobbyist Adrian Yalland.


The government claimed the case was unarguable since the existing EEA agreement would automatically cease to exist once the UK left the EU.


Under the terms of the EEA, which first came into legal force in 1994, the EU’s 28 members and three other signatories are bound to accept the free movement of people, services, goods and capital across their borders.




Dismissing the case, Lord Justice Lloyd Jones and Mr Justice Lewis said the government had not made a decision “as to the mechanism by which the EEA agreement would cease to apply within the UK”.


As a result, they said it was not clear at this stage what issues, if any, would fall within the jurisdiction of the courts.


In a joint statement, Mr Wilding and Mr Yalland suggested the government had “used procedure” to thwart them.


They said they would not rule out bringing further proceedings to give all those who would be directly affected by Brexit some form of legal certainty about their rights.


“It is intolerable that those who depend upon their EEA rights to trade with the EEA, or those who are married to EEA citizens, or are EEA citizens resident in the UK, are being used as a negotiating pawn by a government who can choose to act unilaterally to clarify our legal position, but will not,” they said.


“The government must stop playing poker with our rights and stop taking liberties with our freedoms.”


But a government spokesman welcomed Friday’s decision.


“As the prime minister has said, we will not be a member of the single market and we will be seeking a broad new partnership with the EU including a bold and ambitious free trade agreement,” he said.


Former UKIP leader Nigel Farage said the ruling was “good news”.

Select Milano Monitor 23/01/2017

Brexit, pronto il piano per portare la City a Milano: a marzo la presentazione del progetto a Londra

La Repubblica

20 January 2017

Summary from Italian:

  • Select Milano is to begin its “roadshow” in London this March, meeting with the financial community to convince City operators to move to Milan.
  • The movement of Select Milano to bring Euro clearing activities to Milan, in particular, has traction in the Italian Parliament, evidenced by the recently-passed bipartisan resolution (with the sole disapproval of the Five Star Movement) to help move forward the creation of a Financial District in Milan.
  • Other fruitful steps already taken in the government include tax incentives and the new arbitration body within the CONSOB.
Secolo d’Italia
By Antonio Pannullo
20 January 2017
Summary from Italian:
  • Despite the purported top contenders for post-Brexit business to be Ireland, Germany and France, Milan will begin its “roadshow” in London this March to promote itself to financial operators within the City of London (six months later than the equivalent group from Germany, Frankfurt Main Finance). It is noted that perceptions of legal uncertainty and the Italian tax system may, however, discourage such a move.
  • Select Milano is working to put the pieces in place to encourage investors to consider Milan. The government has shown its support through the recent resolutions in the Finance Committee which seek to help create the necessary conditions for a “financial citadel”. Motions taken include the approval of tax incentives for financial professionals and the creation of the arbitration body within the CONSOB.
By Raffaele Ricciardi
17 January 2017
Summary from Italian:
  • Article discussing the Finance Committee’s passage of the resolution which will seek to create the EEIG and support the establishment of a financial district in Milan.
  • Co-signatories Alessandro Pagano and Gregorio Gitti noted the importance of demonstrating political firmness in encouraging the government to act on this matter.
  • With the significant political commitment and will seen across the Parliament and other institutions, progress can be expected to be made by the government, specifically the Ministry of Economic Development.
  • The resolution is further discussed at Affari Italiani and Corriere della Sera, but without mention of Select Milano’s role in the process.
Wall Street Italia
By Alessandra Caparello
20 January 2017
Summary from Italian:
  • Select Milano, in its effort to bring the Euro clearing activities to Milan, has estimated that transferring these activities could help bring 10,000 new jobs to the city.
  • At a recent meeting at Simmons and Simmons last week, Roberto Tasca (councillor in Milan) noted that Milan is particularly competitive due to its transport system, its real estate, its fibre network and its top schools and universities.
  • The national government has also signed-on to this initiative, committing to work to establish a financial citadel in Milan. One particular area which the Finance Committee seeks to resolve is the Tobin Tax, the abolishment of which could help to win business for Milan.
  • Bepi Pezzulli noted that if Euro clearing is moved to Frankfurt, this would only help to bolster the rhetoric of populists who believe the EU already centres solely on Germany.
  • A similar piece features in Il Fatto Quotidiano.
Italia Oggi
By Paolo Panerai
21 January 2017
Summary from Italian:
  • A discussion of Italian banking and public debt, concluding that the financial situation in the country would become easier should Milan become a more important financial centre.
  • While Frankfurt and Paris are already working hard to garner post-Brexit business, Italy’s charge is being led by Select Milano which is working to create the necessary conditions in Italy to make it more competitive. The transfer of financial business to Milan would be good both for jobs and for GDP growth, as well as increasing the culture for investment in the real economy.
Il Giornale
By Marta Bravi
20 January 2017
Summary from Italian:
  • Two goals that Milan soon hopes to achieve are the acquisition of Euro clearing activities and the European Medicines Agency. The pieces for this are beginning to align, with the recent creation of the arbitration body in the CONSOB and the recent EEIG resolution being passed in the Finance Committee.
  • Select Milano is helping to bring this all together, encouraging the government to create the conditions necessary to make Milan more attractive. Bepi Pezzulli notes that clearing activities are strategic for the development of the banking markets as well as for systemic risk management.
  • Luca Peyrano of Elite SPA notes that Milan Stock Exchange is already considered first in Europe for diversification and efficiency, and is a leader in the field of bonds and derivatives. It also has further safeguards than either London of Frankfurt.
  • A broad political consensus is being built in Italy, with officials in Milan’s international relations department meeting with representatives from Goldman Sachs.
Il Giornale
20 January 2017
Summary from Italian:
  • Interview with Bepi Pezzulli, President and Founder of Select Milano.
  • Mr Pezzulli notes that Select Milano is  group working to create a new paradigm for commercial relations between Italy and the UK, involving Milan and the City of London, to create a Eurozone financial district in Milan.
  • Select Milano’s role is similar to that of the London Olympic Committee or the Organising Committee for the Milan Expo — it is helping to acknowledge and create the conditions necessary to make its objectives a reality.
  • The pre-existing links between the LSE Group and Milan gives more protection and security to Milan than other cities like Paris.
  • Mr Pezzulli reiterates that Milan is not seeking to steal business from London — rather, it seeks to build a mutually-beneficial partnership which will help to develop each other’s banking systems and enable more effective risk management.
Summary from Italian:
  • Select Milano’s efforts to bring post-Brexit financial business to Milan are well underway, with it set to begin its “roadshow” with financial institutions in London this March.
  • A bipartisan resolution recently passed in the Finance Committee to help create an EEIG within the city which will allow Italian companies to work alongside international ones. Committee Chair Maurizio Bernardo said that the proposal to secure Euro clearing activities in Milan should be supported across all Italian institutions. The attractiveness of the city gives it the necessary credentials to be the capital of European finance.
Milano Finanza
By Andrea Pira
21 January 2017
Summary from Italian:
  • The establishment of a financial centre in Milan will be a great opportunity for economic growth and to re-boost Italy’s economy. Italy’s institutions need to work together in order to secure this.
  • Banks like HSBC and UBS already announced their decision to move jobs away from London.
  • Maurizio Bernardo, Finance Committee chair, is the primary signatory of the EEIG resolution which passed the Committee on 17 January. He is interviewed for this piece.
  • Bernardo affirms that the government supports the creation of a financial district in Milan. Milan is able to attract investors from many foreign countries, and is looking to bring the European Medicines Agency to the city as well.
  • Bernardo states that this will be an opportunity to re-think the Tobin Tax as well.
  • From March, Select Milano will begin its London roadshow. According to Bernardo, this will be an opportunity for all Italian institutions to work together to make this successful.
  • Eyewear group Luxottica-Essilor has recently shown a loss of appeal in the Milan Stock Exchange. Bernardo says that this will be an opportunity to renew confidence in it and give momentum to Milan’s economy and finances.
  • Even if the British Parliament rejects Brexit, Bernardo thinks Italy will still be very attractive to investors.
By Ugo Poletti and Amedeo Valzer
Milano Finanza
21 January 2017
Summary from Italian:
  • One of the less-discussed topics within Brexit talks is the future exclusion of British universities from European exchange and research programmes.
  • In 2014 when Switzerland rejected the agreement on freedom of movement with the EU, Swiss students around Europe received a letter to inform them about the cancellation of their programme.
  • Further, Brexit is not just about the ERASMUS programme, but about partnerships and research done with European funds that will be easier to do with the USA and Canada as of now.
  • UK universities will have to establish partnerships with European universities to access EU funds.
  • Among European universities, Germany is not a good choice due to the low rankings of its universities. Spain is attractive for its connections with South America, but it has a high unemployment rate, and the most-industrial region (Catalonia) has banned Spanish-language teaching for Catalan.
  • France has good quality universities, but they are suited more to train and educate local students.
  • Italy has great potential: Italian is the 3rd most-studied language around the world after English and Spanish, and many of its universities have high international rankings.
  • Considering that Milan might be able to attract Euro clearing and the European Medicines Agency, its innovative populace would be able to tailor university courses for these activities.
Il Sole 24 Ore
By Lucilla Incorvati
19 January 2017
Summary from Italian:
  • Select Milano estimates that Euro clearing could help to bring at least 10,000 new jobs to Milan and help to boost the country’s GDP by 30 billion, with another 6 billion in additional tax revenues.
  • Milan is competing against Paris to attract the Euro clearing market, but Paris is not considered that attractive to foreign investors anymore due to issues of security. From a financial and tax point of view, it does not offer any significant advantage over Milan.
  • Other competitors Dublin and Luxembourg are too small to host such a market.
  • Milan is not just interested in the clearing market, but would also like to pick up business from those operators leaving London as a result of the loss of EU passporting rights.
  • Milan Mayor Giuseppe Sala, who is already working to have the European Medicines Agency transferred to Milan, is supporting the initiative as well.
Il Sole 24 Ore
By Lucilla Incorvati
21 January 2017
Summary from Italian:
  • Major of Milan Giuseppe Sala has confirmed his support for the creation of a financial district in Milan.
  • A decree for the creation of the EEIG will soon be issued from the Council of Ministers. Bepi Pezzulli believes that Milan can truly become a successful financial district, and that the EEIG is the best way to go about realising this.
  • Within the EEIG, Milan could work with institutions like the City of London Corporation or the IFSC in Dublin.
  • Tobin Tax remains a potential obstacle to Milan’s competitiveness, but Select Milano has proposed that this should be abolished.
  • Arbitration is proposed as a way to avoid the traditional slowness of the Italian judicial system; it will help facilitate the dialogue between relevant parties and will cost less than traditional proceedings. This will make the system more aligned to that of English Common Law.
By Andrea Emmanuele Cappelli
22 January 2017
Summary from Italian:
  • [Full text unavailable, the below is a summary of the available text.]
  • Measures have been put in place in Italy to help attract people from the finance community, including significant tax incentives.
  • Bepi Pezzulli of Select Milano stated that Milano is the ideal home for the Euro clearing market considering that the clearing house LCH Clearnet controls both the LSE and the Milan Stock Exchange. This results in a convergence in interests between the City and Milan, and could help to bring 10,000 new jobs.
  • The Euro clearing market requires an ecosystem comprising four elements: entrepreneurs, financiers, university research and service providers. With Milan hosting the second-largest industrial base in Europe, as well as elite universities and a significant transport network, it is ideal.
  • Mr Pezzulli further notes that a relocation of the Euro clearing market would threaten the supremacy of London, and Paris has significant fiscal pressures and a greater terrorism risk than Milan.
  • The proposed EEIG structure would help Italian and international companies to work together seamlessly. Mr Pezzulli notes that if Italy can work together, Milan can be the answer to the Brexit problem.

Milan and Brexit:

At least seven countries are jockeying to host the EU’s medicine watchdog after Britain leaves

Science Mag

By Kai Kupferschmidt

20 January 2017

When a relationship ends, there are usually just two people to fight over who gets what. Not so with Brexit. The U.K. hasn’t even triggered the negotiations to end its membership of the European Union, but already half a dozen countries are jockeying to host the European Medicines Agency (EMA), currently located in London. This week, the Dutch government became the latest to announce it wants to host the influential regulatory agency once Brexit is a done deal.
In a Q and A posted with the announcement (Dutch), the government noted that Ireland, Italy, Sweden, Austria, Hungary, and Malta have all said they will seek to host EMA. But Spain, Denmark, Germany, and Finland have unofficially expressed an interest as well. Other countries, like France, may still come forward.
Set up in 1995, EMA employs about 900 people, making it one of the biggest EU agencies; it has a €300 million annual budget and draws some 65,000 visitors to more than 500 international meetings every year.
The decision where to move EMA will be made by the European Council, comprised of the leaders of the remaining 27 member states, after what is expected to be extensive political negotiations. An EMA spokesperson says the agency has made a list of things the new location should have. It includes good transport links, a large enough building, and hotel capacity nearby. “For our staff we need sufficient housing, access to international/ European schools, employment opportunities for spouses/ partners in a safe location,” the spokesperson adds.
Observers say it is far too early to consider which country best meets those demands. But moving the agency will be a “Herculean task” requiring lots of planning, says Martin Munte, president of the Austrian Pharmaceutical Industry Association, so an early decision could help to keep disruptions to a minimum. “I know for a fact that the agency will lose half its collaborators when it moves,” says pharmacologist Adam Cohen, who heads the Centre for Human Drug Research in Leiden, the Netherlands. “You have to rebuild it completely, wherever it moves.“
Many of the candidates believe it’s never too soon to start lobbying. Milan mayor Giuseppe Sala travelled to London in July, weeks after the Brexit vote, to make a pitch. Spain’s deputy prime-minister Soraya Saez de Santa María said the same month that the Spanish government would “fight for Barcelona as the seat of EMA.“ Several governments have set up working groups to strengthen their bids.
All have their arguments lined up. Barcelona feels it deserves the agency because it came in second when London was chosen. Eastern European countries can point to the dearth of EU agencies in their region. German pharmaceutical associations say Bonn is perfect because it’s already the home of the Federal Institute of Drugs and Medical Devices, which is larger than EMA. The Dutch government says its central location and excellent connections at Amsterdam’s Schiphol airport make it an ideal hub; it also suggests that the Netherlands deserve EMA as “compensation” because the country’s economy will be harder hit by Brexit than most. How much any of these arguments will matter is anyone’s guess.
And then of course there is still the faintest of hopes, shared by many scientists, that the move won’t be necessary because the relationship between the EU and the UK can be rekindled. “If Brexit didn’t happen, that would be the best thing,” says Cohen. “But assuming the world intends to do something this stupid, then you have to move the EMA.”

Europe and Brexit:

Brexit: Goldman Sachs ‘considers moving half its London workforce (3,000 jobs) to Europe and New York’


By Ben Chapman

19 January 2017

Goldman Sachs is considering moving half of its London-based jobs to Frankfurt and other financial centres because of concerns over Brexit, German newspaper Handelsblatt has reported.
As many as 1,000 staff will move from London to Frankfurt, with other key operations moving to New York, France, Spain and Poland the paper reported, citing financial sources.
In total, the US investment bank could reduce its London staff from 6,000 to 3,000 under the plans, Handelsblatt said.
Staff moving to Frankfurt would reportedly include traders and managers responsible for regulation and compliance, the paper’s sources said. Back-office personnel would move to Warsaw and investment bankers who advise French and Spanish companies would move to those countries.
The reports come a day after the US investment bank posted surging profits, in part thanks to volatile trading in the wake of Donald Trump’s US election victory.
On Wednesday, UBS chairman Axel Weber said that about 1,000 of the Swiss bank’s 5,000 employees based in London could be affected by Brexit, while Stuart Gulliver, HSBC’s chief executive, said the bank could relocate 1,000 staff to Paris.
A spokesperson for Goldman Sachs said: “We continue to work through all possible implications of the Brexit vote. There remain numerous uncertainties as to what the Brexit negotiations will yield in terms of an operating framework for the banking industry. As a result we have not taken any decisions as to what our eventual response will be.”
Cities across the EU have been vying to attract London financial jobs since the June vote to leave the trading bloc, with Frankfurt and Paris among the leading contenders.
Leaving the EU’s single market is likely to result in banks losing crucial passporting rights, which allow them to sell their services freely across the rest of the EU and give firms based in Europe unfettered access to Britain.
Loss of the passport could be devastating to the City unless a deal offering similar levels of access is secured. Nearly 5,500 firms registered in the UK currently use the rights to operate in other European countries.
18 January 2017
Two of the largest investment banks in the City of London have confirmed that some staff will definitely have to move abroad when the UK leaves the EU.
HSBC’s chief executive, Stuart Gulliver, told Bloomberg he was preparing to move 1,000 staff from London to Paris.
And Axel Weber, boss of Swiss bank UBS, told the BBC “about 1,000” of its 5,000 London jobs could be hit by Brexit.
The comments underline that many thousands of banking jobs may move.
The statements from the two banks come just a day after UK Prime Minister Theresa May outlined the UK government’s Brexit negotiating strategy which would, she said, involve leaving both the European single market and the EU’s customs union.
Analysis: Simon Jack, BBC business editor
It seems that HSBC wasn’t bluffing. The day after Theresa May confirmed the UK will be leaving the single market, HSBC confirmed plans to move 1,000 bankers to Paris.
We always knew how many but today we learned how much business they would take with them from London. Those bankers generate 20% of HSBC’s European banking revenue – a number that HSBC wouldn’t split out but is in the billions.
Revenue is not the same as profit but the move will dent government tax receipts, as will the loss of income tax from a thousand highly paid investment bankers.
UBS has also previously threatened to move 1,500 bankers, nearly a third of its workforce, to Europe in the event of Brexit. But today the chairman Axel Weber told the BBC he hoped the final number would be lower.
UBS privately acknowledge that whatever happens a significant number of jobs will leave, most probably to Frankfurt, and that process will start soon after the UK triggers Article 50 – the mechanism to leave the EU.
With Britain’s exit from the single market confirmed by the Prime Minister, what were once contingency plans are now becoming reality.
UK citizens voted in a referendum last June that the country should leave the European Union.
Since then, there has been widespread speculation that many financial jobs based in London might migrate to cities in the rest of Europe, such as Dublin, Paris or Frankfurt, so that the banks concerned could continue to offer their services to EU clients.
Quick decision
Mr Gulliver said his bank was in no rush, but added: “Specifically what will happen is those activities covered specifically by European financial regulation will need to move, looking at our own numbers.
“That’s about 20% of the revenue,” he told Bloomberg Television at the World Economic Forum in Davos, Switzerland.
But he added: “I don’t see the foreign exchange market moving, the investment grade bond market moving, the equity market moving and the high-yield bond market moving.”
HSBC has already said that post-Brexit it would keep its global headquarters in London and its UK headquarters in Birmingham.
And Mr Gulliver explained that HSBC was helped by the fact that it already had a bank established within the EU as it had bought Credit Commercial de France in 2002.
But he said the position for other banks was different.
“Some of our other fellow bankers have to make decisions pretty quickly now – given that the UK said it will come out of the single market – about applying for banking licenses in some of the EU countries. We don’t have to do that,” he said.
Last week, the chairman of HSBC, Douglas Flint, told a committee of MPs that 1,000 jobs at his bank’s London offices would move to France once Brexit was triggered, a point his bank first made in the aftermath of the referendum last June.
‘Anticipating the worst’
UBS chief executive Sergio Ermotti told Bloomberg he would have a better idea towards the end of 2017 about how many jobs at his bank will need to move out of London.
But one of his senior executives, Andrea Orcel, also speaking at Davos, said: “With Brexit we will have to [move] and the question is how many.
“That will very much depend on the agreement that the UK will reach with the EU – but we will definitely have to go.”
Mr Orcel added that his bank was “anticipating the worst”.
He explained that if the UK and the EU did not reach any sort of transition deal about Brexit, then some of his staff in London would have to be moved as soon as the UK government invoked Article 50, the legal procedure to leave the EU.
Meanwhile the Irish airline Ryanair says it may abandon its few routes which are wholly within the UK, once Brexit is achieved.
Its finance director, Neil Sorahan, said it might take this step rather than to comply with new regulations which demand that it obtain a UK air operating certificate.
Domestic UK flights involve only 2% of the company’s routes.
By Helen Collis
16 January 2017
Brexit might be good for Ireland after all.
The Irish government, which fiercely opposed Brexit during the referendum campaign, now sees Britain’s impending exit from the EU as a chance for the country to make itself heard in the European club. One way it’s trying to exploit this opportunity is by pushing to host the European drug regulator, which will have to move from London. Having the European Medicines Agency in Ireland would not only boost the local economy. It would also give Dublin greater power at Europe’s table as it fights to maintain sovereignty over its tax rates.
“There’s the possibility to ride two horses at the moment: The Irish coming out into the world — a small country defining itself in Europe, being around the table with the big players,” said Brian Hayes, a Fine Gael MEP.
Ireland’s open-arms approach to big business means that unlike in the U.K., “pharma” correlates less with greedy fat cats exploiting capitalism and more with jobs, employment, wealth and security. The sector has helped transform the economy in the last half century. Nine of the world’s top 10 biggest drugmakers are located here. Half of the country’s goods exports come from this sector — €30 billion in 2015.
And unlike the Brits, the Irish are acutely aware of the benefits EU membership has brought the country. Without the link to the single market, the free flow of products, services and workers and more than 40 years of cash handouts, the economy would not be where it is today.
Ireland’s lawmakers relish these details as they prepare a bid for the relocation of the EMA, the hundreds of jobs it brings directly and the thousands it could foster indirectly.
Other places in the race to host the agency are Milan, Rome, Paris, Lyon, Strasbourg, Lille and Copenhagen. Bids are being drawn up in Sweden, Poland and Hungary. But Dublin’s proximity to London, similar culture and English language are assets Ireland hopes will sway the decision-makers.
Most Irish people are quick to footnote they don’t want Britain to leave the Union. It’s Ireland’s primary trading partner, exchanging €1 billion a week across the Irish Sea, as well as thousands of people freely crossing back and forth for business. The U.K.’s departure will force difficult decisions over its land border with Northern Ireland.
However, there are scads of opportunities in the choppy wake of Brexit for the small EU country with a population of little over 4 million — the EMA being one of the most prized.
“Unwittingly, Brexit may present Ireland with the chance to seize the next phase in our development and maturity as a sovereign state,” European Commissioner for Agriculture, and former politician in Ireland, Phil Hogan wrote in the Irish Times.
A unique case?
Even before the U.K.’s referendum, domestic pharma trade groups began local lobbying for the agency, even though Sweden’s LIF drugmakers’ association got there first in February; Italy’s Farmindustria was a close second, followed by Denmark’s pharma trade association, also called Lif.
Most of the initial industry proclamations have been buttressed by official government commitments, including from Sweden, Spain, Italy, France and Hungary. Milan’s mayor touted the city’s wealth of Expo real estate capacity and its 10 universities. Barcelona, which came second to London in the first EMA bid, has demonstrated it has ample space and infrastructure. A win for Barcelona could also extinguish Catalonia’s heated struggle for independence from Spain — at a time when Europe is on high alert to stamp out any spark that might ignite demise of the Union.
After Brexit, however, Ireland will be the only English-speaking country in the EU easily accessible from London with direct access to the single market. With a booming life sciences industry, Health Minister Simon Harris is compiling what he argues is a heavyweight case for Dublin to host the medicines regulator: how seamless it would be.
“Proximity to London is key,” Harris said. It offers the “best chance” of minimizing staff turnover, he said, pointing out many people commute between the cities.
Harris’ game plan is largely based on a conversation he had with European Commissioner for Health Vytenis Andriukaitis last year. The Commission will set criteria for the next EMA location; European heads of state will then vote on their preferred site. Andriukaitis wants to ensure “continued working … a smooth transition and the least disruption,” Harris said.
In December, EMA head Guido Rasi said Brexit could cause “significant disruption.” A staff survey revealed up to 50 percent could leave if the agency has to relocate. Seven senior executives have already resigned since the vote — more than in the last decade — Rasi told the European Parliament recently. Among them, Emer Cooke, former head of the EMA’s international affairs.
Logically and practically, Dublin is the best choice to mitigate these risks, Harris said, adding that there’s a “familiarity between the two cities and the people,” that you wouldn’t see anywhere else. It’s a sentiment echoed on the streets of Dublin. “You won’t believe me but Dublin is like a little London. It’s really cosmopolitan and full of young people,” said one Dublin taxi driver in his 50s who lived in London for 15 years.
This smooth transition would also be aided by Ireland’s medicines regulator, which “punches above its weight” for the size of its population in its representation on the EMA’s decision-making committees, said Lorraine Nolan, chief executive of Ireland’s Health Products Regulatory Authority, arguing this demonstrates the level of expertise in Ireland’s agency.
Pro-pharma mindset
Decades of high unemployment before the arrival of big multinationals — starting in the 1960s after a deliberate shift in fiscal policy to attract tech and pharma companies — instilled an open mindset to creating jobs.  The seeds of Ireland’s now-booming pharma industry were first sown in 1958 with the arrival of the Danish group LEO Pharma, followed by Pfizer in the 1960s and many more, including Eli Lilly, Merck Sharp & Dohme and Novartis.
“The rates of corporation tax are very competitive … that initially kicked it off,” said Matt Moran, head of the biopharma and chemical manufacturing group Biopharmachem, an association of Irish business lobby group Ibec, adding that access to the EU and the English language were also big pulls.
Plants manufacturing pills grew into hubs with sales and marketing suites, and more recently research and development for high-value biological medicines. Ireland has developed a reputation for “good quality, leading edge manufacturing, compliance and trustworthiness, and we can deliver,” Moran said.
The biopharma industry employs 28,200 directly and generates the same number of jobs indirectly, according to a recent government report. “Traditionally people would emigrate to London for jobs, but that trend’s now reversed,” Moran said. The EMA would probably bring most of its own experts, but it’s likely other firms would follow.
“Japanese companies want to be close to the EMA. If we can attract 10 percent of those companies [from the U.K.], that would be positive,” said Tommy Fanning, who is leading the EMA bid at the government’s Industrial Development Authority (IDA) Ireland. The IDA expects supporting services such as law firms and consultancies to also follow.
The industry also has unusually close ties to universities, facilitated by IDA Ireland. “The size of pharmaceutical companies’ presence here drives a lot of the biomedical science courses and jobs,” said Tony Byrne, technical director of Trinity College’s Biomedical Science Institute.
In 2011, the government’s IDA set up the National Institute for Bioprocessing Research and Training to offer courses specifically tailored to meet the staffing demands of the sector. About 4,000 people have been trained each year since it launched, typically for blue chip pharma clients, but also in regulatory science — the types of skills the EMA staff will need.
Is Dublin ready?
There is little doubt about the benefits the prestigious EU agency would bring to Ireland. But while Dublin looks rosy through a life sciences lens, Ireland’s infrastructure issues could be a blemish.
“We are not concerned about relocation but about the workability: We have to bring 40,000 people each year at the right time, and we have to have an airport, ground transportation, 350 rooms [available] per night, five days a week,” EMA’s Rasi recently said.
Ireland suffered an acute housing market bubble and burst in 2008. Prices plummeted 50 percent and development ground to a halt for housing, real estate and hotels. There’s a chronic shortage of housing in Dublin in particular, and rents have soared so much that the government is debating an emergency cap on rental increases in Dublin and Cork.
“Multinationals say their top concern is accommodation and how to address that,” said Kieran McQuinn, head of economic analysis at the Economic and Social Research Institute. Google, Facebook and Apple are big employers in Dublin. Many of their staff are foreign nationals: 70 percent at Google, which alone employs around 4,000 people. But this also vexes some locals who feel forced out of the city by increasing rents.
Since the 2008 building collapse, “it’s taken years to begin to recover,” McQuinn said. Today however, the city’s skyline is dotted with cranes twinkling with fairy lights. Roads are being dug up to improve the tram lines and a new project is underway to connect the airport to the city center by rail — delayed by the recession.
“There’s a huge amount of office space being built at the moment,” said Fanning of IDA Ireland, confident the city will have the right requirements for the EMA. The agency now sits comfortably in a new Canary Wharf skyscraper overlooking the River Thames with ample committee rooms that are decked out with the latest video conferencing equipment.
Dublin’s hospitality also suffered years of underinvestment, creating a shortage of good hotels, “and the cost has increased sharply reflecting this,” McQuinn said. The city has tried to attract high-quality big hotel chains but Dublin’s strict skyline height limits are a turn off, he said. Around the inner city Georgian streets, the average height is around 45 feet, allowing the oldest parts of the city to stand out. There are exceptions, however, such as the western Dockland area, where Google’s building is the highest, but still only stands at 220 feet, around 22 stories.
For arriving families, childcare costs are “very high,” said McQuinn, and the majority of schools are Catholic. “Some people might say there is a shortage of non-affiliated schools,” he said. But with an influx of EU citizens in recent years, investment in foreign schools is increasing: A new international baccalaureate school is due to open in Ireland next year, according to the IDA.
We heart EU
Ireland’s turn of economic fortunes in the last 40 years has been largely thanks to two factors: the arrival of big multinationals attracted by the fiscal perks and the joining of the European Union in 1973 presenting access to the single market. The latter continues to influence public sentiment: In a 2015 Eurobarometer survey, Ireland was the second-most supportive country of the European Union after Romania, with 57 percent saying the EU mostly conjures a positive image.
Today, Ireland’s EU contribution is rising because the economy is surging, in no small part thanks to pharma and tech companies. It means Ireland is now a net contributor after decades of being a net beneficiary.
This fact, and Europe’s greater dependence on net contributor countries after Brexit, all play into Ireland’s hands — giving it reason to hope in its bid for the medicines regulator.
“I remain very optimistic,” Harris said. “If we follow the evidence, Dublin stands up extraordinarily well, otherwise I wouldn’t be putting so much of my time into it.”
The Week
16 January 2017
Bosses at the London Stock Exchange (LSE) have denied its merger with Frankfurt-based rival Deutsche Boerse poses a threat to huge volumes of business and jobs in London.
A report in The Times, based on research commissioned by the German stock exchange, reveals claims that it “has a good chance of winning significant long-term market share in the areas of interest rate and currency trading”.
The risk of substantial trading activities being lost raises “fresh questions about whether the deal, which will have to be signed off by the Bank of England, is in the City’s best interests”, adds the paper.
Following last March’s £21bn “merger of equals”, which will bring together the main stock exchanges in London, Frankfurt and Milan, it was originally thought the greatest regulatory and political hurdles would be faced in Germany over the decision to have the new group’s HQ in London, although Deutsche Boerse shareholders are to control 54 per cent of the combined entity.
In contrast, the report by Dirk Schiereck, chairman of corporate finance at Technische Universitat Darmstadt, says Frankfurt will now enjoy opportunities arising from the Brexit vote in June.
It is wildly feared London will lose its position as the European centre for euro-denominated transactions as a result of the EU referendum result.
LSE chief executive Xavier Rolet has warned as many as 232,000 jobs could be at stake.
But the company today dismissed the claims as “inaccurate and misguided”, says City AM.
It said: “[T]he existing regulatory framework of all regulated entities will remain unchanged and, in particular, there is no intention to move the locations of Eurex or Clearstream from Frankfurt, LCH from London and the US, Monte Titoli from Milan or CC&G from Rome following completion.”
By Stephen Morris and John Detrixhe
19 January 2017
London will probably end up winning the battle over its clearing industry, according to four top bankers in Davos, adding to the debate over whether the U.K.’s financial industry will be stripped of a crown jewel.
Despite French and German threats to claw away clearing in euro-denominated derivatives, Britain will probably continue to house trillions of euros of swaps trades because limiting where the operations can take place could backfire, said the executives from several global firms, speaking on condition of anonymity at events around the Swiss ski resort. Imposing controls on how and where the common currency is used could damage its reserve status, they said.
Clearing usually isn’t cocktail conversation in Davos, but Europe’s financial plumbing has been a top concern among power brokers since Britain’s June vote to leave the European Union. Bankers have not been unanimous in their views, however. Executives at four of the biggest global investment banks in London in September said they expect France and Germany will prevail in the clearing tussle.
One of the executives at Davos said forcing a move would pose risks to financial stability, a point the banker plans to make to EU policy makers.
Clearinghouses stand between buyers and sellers and act as protection in case of a default. Their role in the financial system has been solidified by regulations requiring an increasing number of trades to flow through them. Separate industry officials have said it’s also desirable to keep derivatives clearing in the U.K. because traders prefer the country’s bankruptcy law.
Some EU officials coveted London’s market share for euro clearing long before Brexit, and the referendum gave them a reason to try again to take it, whether or not the U.K. found a way to stay in the single market. French President Francois Hollande said in June that the U.K.’s EU presence was the only reason its dominance of euro clearing was tolerated.
Now, U.K. Prime Minister Theresa May has pledged to quit the single market, even though she’s called for a “phased approach” to smooth the process. A report by Oliver Wyman on behalf of a U.K. lobby group estimated that leaving the EU market jeopardizes almost 70,000 British jobs.
Euro clearing could leave London without being forced to do so, said Graham Bishop, a consultant on EU integration and a former banker. Traders may need to clear euros in the EU if they believe that’s the only place where the European Central Bank will prop up a clearinghouse during a crisis, he said. That’s because the ECB is the lender of last resort for euro assets.
“They’ve put customers on notice that they’re more vulnerable elsewhere,” Bishop said. “Customers will make up their own mind. I’m not sure the ECB needs to do very much for euro clearing to leave London.”
While different forms of daily clearing have taken place in London for more than 200 years, today’s debate centers on a unit of London Stock Exchange Group Plc called LCH. The numbers are immense: LCH has already cleared 1.2 trillion euros ($1.3 trillion) of interest rate swaps this year. The interest-rate swaps market itself, which has been around since the 1980s, is massive — some $2.7 trillion overall changes hands daily. LCH handles more than 90 percent of cleared interest-rate swaps in major currencies.
Those major currencies include the U.S. dollar. LCH has cleared more than $4 trillion in 2017.
The ECB has previously tried to strip euro clearing from Britain, signaling that policy makers in the past thought the rewards worth the risk. While that effort was defeated in court, EU politicians have reignited the fight.
The ECB currently has some shared authority over British clearinghouses through rules known as European Market Infrastructure regulations. The U.K. will no longer be bound by EMIR after Brexit. ECB President Mario Draghi said earlier this month that the central bank should retain its oversight of U.K. clearing, even after Britain leaves.
In the U.S., Commodity Futures Trading Commission Chairman Timothy Massad has spoken against restrictions on the location of clearing, but has sympathized with the EU’s desire to have oversight of clearinghouses in London. Their health is crucial for euro-denominated assets and the entire European economy.
Evening Standard
By Simon English
19 January 2017
The chief executive of Barclays gave his firm backing to the City of London on Thursday, insisting it will remain the top financial centre whatever the political fallout from Brexit.
Speaking at the World Economic Forum in Davos, Jes Staley admitted to concerns about “transition periods” while Britain’s exit from the EU is negotiated, but said London will fend off attacks from Frankfurt and Paris.
“I don’t believe the financial centre of Europe will leave the City of London,” he told the BBC. “There are all sorts of reasons why I think the UK will continue to be the financial lungs for Europe.”
He added that with the US and the UK economies doing well, there is reason for optimism: “A political crisis doesn’t necessarily translate quickly into an economic crisis.”
Staley added: “We’re going to have to make an adjustment to the Brexit move, but it’s going to be one that will be manageable for Barclays, and will not threaten… London as a centre of finance for Europe, and will not threaten the activities of Barclays in London. We are a British bank and are committed to the United Kingdom.”
On overtures from foreign cities, he said: “It’s very interesting that one minute no one wants bankers in their backyard, the next they are inviting you over to a barbecue.”
Chancellor of the Exchequer, Philip Hammond, said on Thursday that financial services will be a “priority” for the Government in its Brexit negotiations. “Six months from now we’ll have a much clearer idea of where we collectively feel we can go,” Hammond said, noting that “a huge proportion of Europe’s financial transactions pass through the City of London.”
It emerged that Goldman Sachs is considering moving 1000 bankers to Frankfurt and some back-office staff to Warsaw. Lloyds is likely to pick Frankfurt as a base for the 3% of its business that is outside the UK.
Barclays chairman John McFarlane said passporting rights were key to negotiations.
“We want a standstill arrangement for three years, that would kick in after the Government’s negotiations on Brexit are finished,” he added.
With Wall Street expecting a loosening of regulation under President Trump, Staley backed the Dodd-Frank regulation separating the big banks’ trading and retail arms.
He noted that Barclays investment banking arm has lately performed well, but suggested a lid will be kept on bonuses.
“We need to generate a fair return for shareholders, and need to compensate our people for performance. You know, if we go back to the days of using money to attract talent, I think that’s very bad for the culture of the company.”
Financial Times
By Michael Stothard and Laura Noonan
22 January 2017
French finance minister Michel Sapin made a pitch to senior executives of America’s largest banks to relocate to Paris after the UK leaves the EU, but raised eyebrows by talking in French with the assistance of an interpreter.

Senior bankers at Goldman Sachs and Bank of America as well as Swiss lender UBS lunched with Mr Sapin at the Hotel Sofitel in Washington DC during an official trip for the G20 meetings in October, according to people at the event. Walter Gubert, vice-chairman of JPMorgan, also attended.

The chief executive of Citigroup met with Mr Sapin separately that morning, said people with knowledge of the meeting.
Over the hour and a half long lunch of pumpkin soup, fish and Bordeaux wine, Mr Sapin set out the stall for Paris as a potentially leading European financial centre following Brexit. He cited the city’s office space, large companies, tax benefits for expatriates as well as increasingly flexible labour laws.
One person close to the situation in Paris said that the reaction was “positive” from the bankers, although the meeting was not intended to solicit firm commitments on moving jobs to Paris.
Others were less convinced about the outcome of the meeting. “The fact that the French minister of finance needed to discuss this via an interpreter was seen . . . as a negative,” said one person.
He added that a discussion about France’s relatively high corporate tax rates reassured attendees that it was high on the agenda, but there were still questions about how far the country would move on the issue.
Bankers also sought assurances on schooling, terrorism and personal income tax rates.
Also in attendance was Bob Elfring, chief executive of Bank of America Merrill Lynch International; Kevin Arnold, global head of senior relationship managers at UBS; and John FW Rogers, chief of staff at Goldman Sachs.
The six banks declined to comment on the meeting.
The Sofitel lunch was one of dozens of formal and informal meetings between French officials and international banks on the attractions of Paris as a financial centre. French officials have also met with Asian and British banks.
Paris has had some early victories in the battle to win business from London. HSBC last week became the first big bank to detail plans to move jobs out of London after the Brexit vote, confirming plans to move 1,000 roles in its London-based investment bank to Paris.
UBS said about the same number of its London employees could be affected by Brexit, while Jamie Dimon, chief executive of JPMorgan Chase, said that more than 4,000 of his bank’s 16,000 UK staff could be displaced. Neither said where they might move.
The meeting shows how global financial institutions are assessing their European business following the UK vote to leave the EU, worrying that London will be hobbled as a financial centre following Brexit. It also highlights how the French government is attempting to court them.

The city is fighting to attract the same business against others, however, such as Frankfurt, Luxembourg and Dublin. Frankfurt, home to the eurozone’s banking regulator and a sizeable financial sector, is considering changing its labour laws to make it more attractive for banks.

Dublin has also said it has had a “significant number” of inquiries from companies looking to relocate to the country, which has one of the lowest corporate tax rates in the EU.
Bankers fear that London, which is home to some 250 foreign banks and the bulk of Europe’s capital markets activity, will lose its right to clear deals denominated in euros following Brexit. UK-based banks could also lose so-called “passporting” rights to operate across the EU.
Many bankers at non-European banks say the inflexibility of the French labour code, along with high taxes, are reasons their groups will be reluctant to move to Paris.
Evening Standard
By James Ashton
22 January 2017
Looming behind St Andrew Holborn, the Sir Christopher Wren-designed parish church that sits at one of London’s busiest junctions, a glass-and-steel giant is taking shape. Goldman Sachs’s gleaming £1 billion European headquarters has been a long time coming.
The investment bank bought an old BT building around the corner from its Fleet Street base 16 years ago but demolition plans were halted when a set of Sixties ceramic murals were granted protected status.
Four years ago, the “banking factory” with capacity for 8,000 staff moved a step closer to reality when approval was granted and the murals were relocated. Today, construction is gathering pace and by 2019 it could be complete — just as the UK formally exits the European Union.
Post-Brexit, as fears rise of a banking exodus, will the City of London still warrant headquarters status? The Square Mile burghers hope so. But last week, as Theresa May confirmed Brexit meant giving up membership of the single market, bankers gave voice to the numbers they have for months been whispering quietly — the human cost to the financial services industry of the UK going it alone.
JP Morgan bosses are touring Germany and Poland looking to relocate 2,500 staff, while Morgan Stanley has identified 1,000 sales, trading and legal jobs that could go. HSBC indicated it would transfer about 1,000 trading staff from London to its Paris base on the Champs-Élysées in two years’ time. The chairman of UBS, Axel Weber, said around 1,000 of the Swiss bank’s London employees would be affected by Brexit. Goldman, whose very visible commitment to the capital is taking shape on Farringdon Street, played down reports that half its London workforce was on the move. A final decision is still to be made, but it could send 1,000 jobs to Frankfurt to continue servicing EU clients. As JPMorgan Chase supremo Jamie Dimon said: “It looks like there will be more job movement than we hoped for.” With the loss of passporting rights that let banks sell services across the EU from London, even Lloyds Banking Group, which does the majority of its business in the UK, will need to set up a subsidiary, probably in Frankfurt, so it can hang on to its German and Dutch retail clients.
But it is not all doom and gloom. Bankers are still betting that London will hang on to its crown as Europe’s dominant financial centre, with Barclays boss Jes Staley saying it will continue to be the “financial lungs” of the region. HSBC chief executive Stuart Gulliver forecasts that the industry’s Brexit-induced lost revenues will be made good in two or three years’ time and that little of the foreign exchange, bonds and equities activity would need to move. Insurers and asset managers believe it will be much easier for them to adapt to the new world.
“The banks are actually very keen not to move jobs if they can avoid it, not least because their staff don’t generally want to move overseas. They’ve got houses here and they enjoy living in London,” says Anthony Browne, chief executive of the British Bankers’ Association (BBA). “The banks are working out what it is they need to do, what all the options are. Now we have certainty we are not going to remain members of the single market, we can cross that off the list.”
So much remains up in the air, such as confirmation that EU nationals already living in the UK are free to stay on after Brexit. This uncertainty affects 12 per cent of City workers — as well as many more in other industries. Big hitters led by Baroness Vadera, chairman of Santander UK, are trying to persuade international lenders not to act yet as a future trading agreement is thrashed out for the financial services sector and bosses press for a standstill deal in the meantime. Consulting firm Oliver Wyman predicts the best-case scenario would have cost the UK 4,000 jobs and £500 million in tax revenue and the worst — where our relationship with the EU is defined by World Trade Organisation terms — could add up to losses of 35,000 jobs and £5 billion in tax. However, those latter figures could be doubled by the knock-on effect elsewhere in the City — for example, if lines of business are closed because Brexit has made them too costly to continue.
The irony is not lost on financiers — vilified for their fat bonuses and supposedly thin morals — that a vote to leave has suddenly made them flavour of the month. The strategic importance of financial services — accounting for
12 per cent of the UK’s economic output — is one thing; the wealth that keeps tills ringing in London’s best restaurants and car showrooms is quite another. Rather than physically relocating people, some of the rebalancing can be done by not filling roles as staff quit and hiring alternatives hundreds of miles away.
For now, a whole Brexit industry has whirred into life as businesses consider what to do next. Karen Briggs, head of Brexit at consulting group KPMG, reports that clients are most concerned about customs, tariffs, immigration, supply-chain management, tax and passporting.
“The potential for some businesses to relocate outside the UK is an area of huge interest, but in general companies are not presenting things as a binary choice between uprooting themselves or persevering in the same location,” says Briggs, who co-ordinates a team of 35 UK industry “Brexperts” that have helped to plan for different scenarios to hedge against disruption. “It’s more about keeping their options open and being able to make a nimble response.” Beyond financial services, activity has been brisk in the healthcare and airline industries.
“It’s all systems go and that will carry on right through this calendar year,” says a senior Brexit lawyer at a City legal firm that has begun staffing up as demand for regulatory advice increases. “So far, it’s more of the intellectual stuff rather than hordes of lawyers trawling through documents.”
But that will quickly change. Contingency plans are being made for the hardest Brexit as banks examine their operations line by line, which regulators they must comply with as they shift business — and how few staff they can get away with relocating. Finding new real estate is the easy bit. What takes time is the setting up of new legal entities with the appropriate banking licences, trading technology, clearing, risk and payments systems. Bosses are divided on where to go.
“Paris appeals, but what about the labour laws?” says one senior banker. “And if we take advantage of the tax-free deals that are on offer, they’ll be burning piles of tyres in La Défense,” he adds, referring to the major business district to the west of Paris. Not only do Paris and Frankfurt have inferior nightlife, but they lag behind in the education stakes too. According to Reuters Breakingviews, when JPMorgan explored how hard it would be to move its currency trading desk from London to Paris years before the Brexit vote, it concluded it would take 30 years to find school places for the offspring of the department’s 800 staff. Anthony Browne of the BBA is convinced London will hang on to its global pre-eminence.
“It has so many strengths: the depth of talent and the agglomeration of so many sectors based here. That is not going to go away. Banks and other financial services firms are still going to want to have major operations based out of London.”
As an example, just look at how Goldman has chosen to run its business from London. Its decision to scale up here can be traced back to the introduction of the euro. Co-locating its traders with its compliance and technology experts is cheaper and safer. It is why the vast majority of the Wall Street bank’s 6,000 staff in Europe, Middle East and Africa sit in London, even though only one-third of its business in the region is for UK clients. There are only 250 bodies in Frankfurt. Brexit means New York has already gained, Goldman’s chief executive, Lloyd Blankfein, confessed last week, because the “vampire squid” bank was already moving more operations staff to London to take advantage of the time zone.
“In New York it is hard to watch Asia, and so we were on track to move more and more of our global activity, so global ops, global technology, all those things made more and more sense to operate out of UK,” Blankfein said. “Now we’re slowing down that decision… because we don’t value doing things twice; moving them there and then moving them away from there.” As for its new European headquarters, it was always going to sub-let space once staff had been moved in from its two sites on Fleet Street. Now Goldman might have to sub-let some more.
21 January 2017
The Minister for Finance, Michael Noonan, has said Ireland would “get its share” of companies leaving the City of London as a result of Brexit.
“We have reason to be optimistic that we’ll get an influx of serious companies into Ireland, principally into Dublin,” Mr Noonan said.
Speaking at the World Economic Forum in Davos, Mr Noonan said the Central Bank has had “over 100 separate” enquiries from financial services companies in the City of London about a potential relocation to Ireland as a result of Britain leaving the EU.
Asked if Ireland was in danger of losing out to rival financial centres such as Paris and Frankfurt, Mr Noonan said: “We’ll get our share”.
“There’s no doubt at all that there are many very serious financial services companies committed to coming to Dublin. It depends on where the Brexit negotiations are trending. But I don’t think they’ll wait till the end of the negotiations,” the Minister stated.
However, Mr Noonan said Ireland was not being “predatory” in seeking foreign direct investment from the London-based financial services centre.
He said the “pipeline” for FDI was “very strong.”
City of London firms were making contingency planning, and the Central Bank, which will have regulatory oversight function of any newcomers, had been hiring extra staff, he said.
The minister said that Amsterdam, rather than Paris, would be Dublin’s main competitor for capturing financial services companies.
“People in the City of London tell me they’ll be looking at Dublin, Amsterdam and on a lot of people’s weighing scales, they weigh about equally,” he said.
Some companies, he said, were “risk averse” and would be moving parts of their operations anyway, even if the Brexit negotiations outcome was not necessarily adverse.
“We’re not predatory in our approach, but we’re facilitating all companies that ask us questions,” he added.
“People in the City of London tell me they’ll be looking at Dublin, Amsterdam and on a lot of people’s weighing scales, they weigh about equally,” he said.
Some companies, he said, were “risk averse” and would be moving parts of their operations anyway, even if the Brexit negotiations outcome was not necessarily adverse.
“We’re not predatory in our approach, but we’re facilitating all companies that ask us questions,” he added.
Earlier, Mr Noonan said that the British Prime Minister’s Brexit plans are unlikely to lead to the re-establishment of a physical border or customs controls on the island of Ireland.
Mr Noonan made his comments in an interview with Reuters on the sidelines of the World Economic Forum in Davos today.
Theresa May said this week that Britain would not remain a full member of the European Union’s customs union, potentially meaning a tighter border between Northern Ireland and the Republic.
But Ms May has pledged to find a practical solution to preserving a common travel area between Britain and Ireland that predates their EU membership, while also limiting immigration.
Asked if this would make customs controls likely along a border that 30,000 people cross each day to go to work, Mr Noonan told Reuters: “I don’t think so and it’s far too early to say.”
“If you look at Ms May’s speech, she committed to the free travel area (between Ireland and the UK). She wasn’t as strong on what she would like from the customs union; she said it might be associate membership,” Mr Noonan said.
“In other words, she opened up a negotiating space around the customs union and it is where that lands that will decide whether goods have to be checked on the border. But a lot of this can be done electronically now and it wouldn’t necessarily mean a hard border,” he added.
The Irish economy is widely considered at being most at risk from the departure of its key trading partner, but Mr Noonan said trade data suggested there was no immediate impact and he expected an economic growth rate of “around 3.5%” to continue into the early 2020s.
In its most recent forecasts in October, the Finance Department said that gross domestic product (GDP) growth of 3.5% predicted for this year would slow to 2.8% by 2020 and 2.6% in 2021.
Mr Noonan, who along with Taoiseach Enda Kenny is meeting senior executives in Davos to explore potential investment into Ireland, said Dublin had received around 100 “hard enquiries” from financial firms considering moving operations post-Brexit.
He said he was not concerned that President-elect Donald Trump could attack US companies that continue to invest in Ireland and that there was no clear evidence of firms putting off investment while they await details of Trump’s tax plans.
“There’s a very strong pipeline of American investors coming into Ireland… now whether hidden in the statistics there are companies that are holding back slightly, I wouldn’t know yet,” the Minister added.
Financial Times
By Jim Brunsden
22 January 2017

The European Central Bank has stepped up its warning that it will be difficult for the UK to hang on to its valuable euro-clearing business after Brexit, calling for EU institutions to seek more, not less, oversight of the trade in London once Britain leaves the bloc.

Speaking at the end of a week in which the UK confirmed it was leaving the EU’s single market, Benoît Coeuré, a member of the ECB’s executive board, said it would be “challenging” for Britain to devise post-Brexit regulations that would provide sufficient confidence for UK-based clearinghouses to continue to process trades in the euro.
The fate of euro-denominated clearing in the UK would depend on whether this “new framework is strong enough,” he told CNBC on Friday.
Mr Coeuré added that the current set-up, in which London is the world’s biggest centre for clearing euro derivatives, was only possible because of solid co-operation with the Bank of England, and because of a shared foundation of “European law . . . implemented under the authority of the European Court of Justice”.
“When this is gone, we’ll have to know what are the new foundations, and whether this is good enough to ensure financial stability in the eurozone,” he said.
“Is that possible? I don’t know . . . It sounds challenging,” he said, adding that the issue “is not for the ECB to judge alone. The [European] Commission will have a say, governments will have a say.”
Mr Coeuré’s stance ehcoes a January 10 letter from Mario Draghi, the ECB’s president, to a member of the European Parliament.
Mr Draghi’s letter notes that EU financial regulations give the ECB “broadly appropriate guarantees for the supervision and oversight” of UK clearinghouses. This includes a right for the ECB to take part in EU-wide “colleges” of central banks and other supervisors that monitor such platforms, it says.
“It will be important to find solutions that at least preserve, or ideally enhance, the current level of supervision and oversight,” Mr Draghi wrote.
The ECB has longstanding concerns over the clearing and settlement of euro-denominated transactions outside the single currency area. In 2015, it lost a case at the European Court of Justice over whether clearers based in London should have to decamp to the eurozone. Since then the ECB has set up a swap line with the Bank of England, where sterling can be exchanged for euros, should liquidity shortages occur.
The latest ECB interventions are a sign of how financial regulation and financial stability concerns will play a key part in negotiations on what kind of market access the City will have post-Brexit.
In her speech last week outlining the key planks of Britain’s exit strategy, Theresa May, Britain’s prime minister, indicated that financial services could be one of a number of areas where the UK would like to retain “elements of current single market arrangements.”
But that idea of special sector-by-sector deals encountered an immediate pushback from other EU leaders, who are wary of British attempts to cherry-pick advantages of EU membership.
The European Commission will in the coming weeks propose changes to EU legislation on derivatives trading to take account of practical experience gained since the rules were adopted in 2012. Last year, it unveiled draft rules aimed at containing the damage should a clearinghouse fail.
Both proposals, which require approval from national governments and the European Parliament, may also be used to address perceived risks from Brexit.
Business Insider
By Will Martin
18 January 2017
JP Morgan CEO Jamie Dimon believes that more jobs than previously expected may have to be moved out of the UK as a result of Britain leaving the EU.
Speaking at the World Economic Forum in Davos, Switzerland, Dimon told Bloomberg editor-in-chief John Micklethwait that following Theresa May’s speech on Tuesday, the bank could be forced into shifting staff elsewhere in Europe, or to its New York offices because the UK is leaning toward a so-called “Hard Brexit.”
“It looks like there will be more job movement than we’d hoped for,” Dimon said.
Where staff move will depend “what the law is,” he added. “We simply have to accommodate the laws of the land both in Britain and the EU, and that will determine how many jobs, and how many people, and how many things have to move.”
JP Morgan has previously warned that as many as 4,000 staff could be moved out of the UK in the event of Brexit, and Dimon said on Wednesday that the actual number could be “more, it could be less, depending on what’s negotiated.”
He was clear that JP Morgan does not want to move staff out of the UK, but that it may have no other choice. “We don’t want to. It’s not a threat, it’s a fact,” he told Micklethwait.
“If the UK leaves the EU, we may have no choice but to reorganise our business model here,” Dimon told staff at the bank around three weeks before the referendum on June 23. That prediction now appears to be coming true.
JP Morgan first opened in Britain 150 years ago and now employs 16,000 people across six sites: Basingstoke, Bournemouth, Edinburgh, Glasgow, London, and Swindon.
Passporting rights allow UK-based financial firms to access clients across the continent via branches and many international firms are readying plans to counter their loss — something that is more likely than ever because of May’s assertion that Britain will be leaving the European Single Market. Leaving the single market is a practical guarantee that the UK will lose its financial passporting ability.
Earlier on Wednesday, HSBC’s chief executive Stuart Gulliver told Micklethwait that bankers who bring in as much as one-fifth of the bank’s revenue may be relocated.
“Specifically what will happen is those activities covered specifically by European financial regulation will need to move, looking at our own numbers — that’s about 20% of the revenue,” he said.
16 January 2017
UBS (UBSG.S) has a degree of flexibility if its UK outpost looks set to lose its ability to operate across the European Union once Britain leaves the bloc, Chief Executive Sergio Ermotti said at the World Economic Forum in Davos on Monday.
“We have a Frankfurt base where we house our wealth management operations and not just that… We have a framework in place and infrastructure that can be expanded if needed,” Ermotti said at a press briefing in the Swiss Alps.
However, he said that the Swiss bank remained in wait and see mode and cautioned that British Prime Minister Theresa May’s forthcoming speech on Tuesday was unlikely to bring much more clarity on what Brexit means.
“We need a higher degree of certainty in order to take action, it will be extremely expensive otherwise,” he said.
UBS employs more than 5,000 people in London. Ermotti has said previously that 20 percent to 30 percent of those employees could be affected should the Swiss bank decide to move.
In 2016, UBS set up a bank in Frankfurt to consolidate most of its European wealth management operations in an effort to conserve capital and simplify its structure.
Irish TImes
By Fiona Reddan
23 January 2017
With the publication of the latest strategy for Ireland’s international financial services sector, the expectation that Ireland can secure some concrete financial projects in the wake of the UK’s exit from the European Union is mounting.
In recent days it has been reported that US bank Citi will move up to 100 jobs out of London, with Dublin a potential candidate, while a host of other potential movers have also been put in the frame.
Launching the report on Monday, Eoghan Murphy, the Minister of State at the Department of Finance, added to this narrative, remarking that there is “huge interest” from companies considering re-locating from London to Dublin.
Thankfully our offering has improved since the days when the IDA was first charged with promoting financial services back in 1987, and a key selling point was the country’s “young, enthusiastic, educated and computer literate people”. However, there are still many uncertainties surrounding how and when UK based companies will actually respond to Brexit, and what this might mean for Ireland.
Indeed while the latest IFS 2020 report, which points to the potential to create 10,000 jobs over the next three/four years, and highlights opportunities in blockchain, crowdfunding, and fintech, gives reasons why Ireland might succeed, there are possibly as many reasons why it won’t.
The jobs won’t actually move
It’s difficult to ascertain exactly what is going on in amidst the posturing and lobbying of financial services companies.
Murphy himself told RTE radio that banks are unlikely to make “wholesale moves” to Dublin, and while the Central Bank has indicated that any companies looking to move here need to put “substantive” operations on the ground, it’s unclear what this might actually mean in terms of job numbers.
UK based asset managers for example can move fund ranges to Dublin, from where they will then be able to sell their fund ranges across Europe, without the need for substantial office space – or employees.
And Dublin hasn’t exactly been a hotbed of new arrivals in recent years; figures from the Central Bank for example show that there were just two new financial services companies authorised in 2016 – a Munich Re backed insurer, Queen Street, and Sofinsod, a subsidiary of Sodexo.
The competition is intense
From Paris to Amsterdam, to Frankfurt to Warsaw, cities across Europe are vying for a flight in business from London. For high value front office trading activites, larger financial centres like Paris and Frankfurt have frequently been cited, while low cost cities like Warsaw – which is already used by many Irish based funds companies as a low cost outsourcing hub – are also in the frame. Goldman Sachs for example is understood to be considering both Frankfurt and Warsaw.
Amsterdam has taken a different tack, and is targeting specific sectors like clearing, fintech and high frequency trading.
Income tax is too high
Despite progress made in the last two budgets to bring personal tax rates in Ireland back in line with international norms, Ireland continues to have high personal tax rates. Tax experts say Ireland falls down in two key areas; the level at which you start paying the top rate of tax (€32,800 ) and the scale of the top tax rate (52%).
Indeed one prominent tax expert who regularly advises multinationals on their investment decisions says he can feel companies lose interest in Ireland the minute he starts talking about a top personal tax rate of 52 per cent.
Consider someone earning £100,000 in London; in the UK this salary equates to take-home pay of £5,456 but in Dublin, a €100,000 salary would leave a single person with just €5,073 a month. So while the cost of living is obviously lower in Ireland, no-one enjoys paying more tax.
Availability of schools
Easy availability of quality schools has long been a critical decision factor for executives when making re-location decisions. The issue is addressed in the latest action plan: “Provided there is the potential to expand international schooling provision in Ireland, it should be possible to meet the demand arising from overseas executives and professionals (including expatriates) moving to work and live in Ireland.”
However, there are no concrete steps outlined in the report to close any gaps that may exist.
The greater risk
If Ireland loses the battle for any business which does re-locate however, the damage could be far greater than just the missed opportunity. The greater risk, perhaps, is the loss of the strong links financial services companies have built up with their counterparts in London. Now, when a UK based asset manager is looking to set up a cross-border fund Dublin, rather than Luxembourg perhaps, is the most obvious choice. Or when a structured finance specialist is looking to establish an SPV, again Dublin might win out over Luxembourg. But if this business relocates to the continent, a Paris or Frankfurt based operation, staffed by locals, may have closer links with a centre like Luxembourg – not Dublin.
21 January 2017
THERESA MAY’S speech on January 17th set Britain definitively on a path to a “hard” Brexit, in which it will leave not just the EU but the European single market. This was not what the City of London wanted to hear. The prime minister did at least pick out finance, along with carmaking, as an industry for which “elements of current single-market arrangements” might remain in place as part of a future trade deal. The City is holding out hope that a bespoke deal built on the existing legal concept of “equivalence” could still accord it a fair degree of access to Europe.
“Passporting”, which allows financial firms in one EU member state automatically to serve customers in the other 27 without setting up local operations, was always going to be difficult after Brexit. Outside the single market, says Damian Carolan of Allen & Overy, a law firm, the “passport as we know it is dead.” Already, two big banks, HSBC and UBS, this week each confirmed plans to move 1,000 jobs from London.
Financial companies all have to firm up their contingency plans. For the City, these focus on so-called “equivalence” provisions, allowing third-country financial firms access to the EU if their home country’s regulatory regime is deemed equivalent. Currently only some regulations, such as those governing clearing houses and securities trading, contain the provisions. Much of finance, notably bank lending and insurance, is not covered. And even where the provisions exist, applying them will, in effect, be a political decision.
Optimists hope equivalence could not just form the basis of a feasible deal, but might even allow Britain to remove some onerous regulations. Jonathan Herbst of Norton Rose Fulbright, another law firm, notes that precedents exist for “variable geometry” in regulation. For instance, to gain access to American clients, some British clearing houses already submit to partial American regulatory oversight. If they deal in euro-denominated trades, nothing seems to stop them from submitting to, say, direct oversight by the European Central Bank without leaving London.
Such proposals may be stymied by cold political considerations. Equivalence determinations are at the full discretion of EU regulators, and the status can be withdrawn at short notice. Britain, as a current EU member, starts with identical rules. In a charged political environment, even a small future divergence could be construed as moving away from equivalence. For all the creative solutions proposed by lawyers in London, Europeans are not minded to let Britain off the hook by allowing it easily to “cherry-pick” sectoral carve-outs. Even before the Brexit referendum in June the ECB had sought to move euro clearing into the euro area.
Yet that is not a reason to dismiss equivalence altogether. It would seem strange, as Mr Herbst points out, to admit Canadian banks into the EU on the back of the recent EU-Canada free-trade deal under better terms than British banks. (Indeed, many Canadian banks have their main European presence in London.)
Even on clearing, it is more likely that euro-denominated derivatives would move to New York rather than continental Europe. According to Mr Carolan, it would be tricky for the ECB to stop this unless it were to forbid European banks from using non-European clearing houses, which would deprive them of access to liquidity. It might be in the ECB’s interest, then, to agree on a bespoke arrangement on clearing. Other financial-market activities may prove harder nuts to crack—especially if, as seems possible, broader Brexit negotiations descend into acrimony.
By Thomas Penny
19 January 2017
London Mayor Sadiq Khan warned European Union leaders that their countries will suffer if the U.K. capital is not allowed privileged access to the bloc’s single market after Brexit.
Financial-services companies, their taxes and jobs will go to competitor countries around the world rather than to European nations if London is frozen-out in negotiations, Khan said in an interview with Bloomberg Television’s Francine Lacqua at the World Economic Forum in Davos Thursday.
“If London was to become inward looking and we fail to secure privileged access to the single market, if we fail to attract talent, businesses would inevitably leave London,” Khan said. “My message to European leaders is they wouldn’t just leave London and go to Madrid, Paris, Frankfurt or Berlin, they’ll go to Hong Kong, Singapore or elsewhere so it’s a lose-lose, a lose for London and the U.K. and a lose for Europe too.”
Prime Minister Theresa May, who is also in Davos, is due to meet Wall Street executives to hear concerns that Brexit will cost banks passporting rights, which enable them to sell their services to the rest of the EU from bases in London. The EU and member governments have been adamant that leaving the single market removes those rights, putting at risk tens of thousands of jobs in the U.K. financial-services industry.
Khan called on business leaders to press May on the dangers of a “hard Brexit” and said the premier’s presence is positive for London as she will be told of their anxieties directly, rather than through ministers and other intermediaries.
“The important thing is the prime minister is here today,” Khan said. “That’s fantastic, the prime minister can listen to job creators, wealth creators, banks, the financial sector, those in the tech sector, political leaders and understand their concerns.”
Belfast Telegraph
17 January 2017
David Davis has appeared to back allowing the Eurozone access to the City of London once Britain leaves the European Union.
The Brexit Secretary said the City offered “an almost bottomless source of low-cost finance” to European industries as he insisted it was in everyone’s interest to have a smooth Brexit.
Reports last week suggested the EU wanted to have special access to British banks post-Brexit.
Bank of England governor Mark Carney also suggested the Eurozone had more to lose from Brexit than the UK.
Tory MP Steve Baker, a member of the Treasury select committee, put Mr Carney’s comments to Mr Davis during a statement on Brexit in the Commons, with Mr Baker saying Mr Davis should guarantee the Eurozone access to the City of London post-Brexit.
In reply, Mr Davis said: “The governor and he make a very good point.
“The City of London, the existence of the City of London, ensures both a pool of liquidity and a source of, almost bottomless source of low-cost finance for most of the industries in Europe.
“I think they’ve got every interest in doing the deal we’ve described, and that again, I reiterate, is what we are relying on, that it’s in everybody’s interest to do this.”
Mr Baker had asked the Brexit Secretary: “The governor of the Bank of England recently told the Treasury committee that the financial stability risks to the Eurozone are greater than those faced by the UK.
“Will he undertake to offer the European Union a full agreement to ensure that through the withdrawal agreement, the Eurozone continues to enjoy access to the City of London?”
Deutsche Welle
22 January 2017
Germany’s Finance Minister Wolfgang Schäuble unofficially advised Britain to adopt Swiss-style arrangements after its exit from the European Union.
“The British should take as an example how cleverly Switzerland combines national sovereignty and close cooperation with the European Union,” Schäuble told Swiss newspaper Neue Zürcher Zeitung (NZZ) in an interview published on Sunday.
“The Swiss are smart enough to know that despite their universally respected sovereignty, they are dependent on their interaction with the world.”
Switzerland is not a member of the EU but contributes to its budget and has a series of bilateral agreements that are linked by a so-called “guillotine clause” – under which if one agreement is broken, they all collapse.
In 2014 that web of treaties was threatened by a referendum result that called for quotas on immigration from the EU. In the wake of Brexit, Brussels stood firm on the freedom of movement clause, and in December the Swiss parliament passed a hobbled version of the bill, which pushed businesses to look for workers already within Switzerland when filling vacant jobs.
Where will you get your plumbers?
Schäuble said with increased globalization of employment, the UK needed to draw part of its workforce from immigration.
“I told the English people, ‘Where are you going to get all the plumbers if you exclude the Poles from your labor market? Then you won’t get your pipes fixed,'” Schäuble said.
“The British government has to be told today that we are living in 2017. The world has changed and it will continue to change.”
He advised Britain to move away from protectionist measures like those that US President Donald Trump has espoused.
“With all due respect, everyone agreed that we should move towards free trade. Long ago, Great Britain even started a war in China for free trade. And now this should no longer apply? Things are never as bad as they look.”
Schäuble warned that Britain’s economy faced trouble.
“Brexit is bad in the long term for Great Britain. In the short run, the economy is currently doing well, but this is mainly because the pound has weakened. We know that countries that rely on devaluations of their currency are not successful in the long term.”
17 January 2017
The chairman and chief executive of Bank of America says major companies like his need clear rules before deciding how much business to maintain in Britain after it quits the European Union.
Brian Moynihan and other top bankers and executives gathered at the World Economic Forum in Davos are eagerly awaiting details about the UK exit plans from British Prime Minister Theresa May in a speech Tuesday.
Moynihan, speaking to The Associated Press, said Bank of America is working on “all kinds of scenarios” to possibly shift activities out of London after Brexit, but insisted “it’s still not clear what that would do, or wouldn’t do.”
He said: “It’s still premature to say what anybody’s going to do until you have one set of rules. London will be an important part of our company no matter what happens with the British economy.”
Noting a mass sense of “dislocation” in the British and US electorate because of fast technological change, he said, “The No. 1 job for the leader of any enterprise, whether civil political or business, is to be responsive to the people they serve.”

General Brexit news:

Brexit: May’s threat to Europe: ‘no deal for Britain is better than a bad deal’

The Guardian

By Anushka Asthana, Heather Stewart and Jessica Elgot

18 January 2017

Theresa May warned European leaders that the UK is prepared to crash out of the EU if she cannot negotiate a reasonable exit deal in a speech where her tough talking rhetoric prompted key figures in Brussels to say that the country was on track for a “hard Brexit”.

The prime minister told EU counterparts that any attempt to inflict a punitive outcome on the UK would be an “act of calamitous self-harm” because it would then slash taxes to attract companies from across the world, in a one-hour address intended to spell out the country’s negotiating strategy.
Although May said that the UK could be the EU’s “best friend” if the article 50 divorce talks went well, she also said she was prepared to walk away. “And while I am confident that this scenario need never arise – while I am sure a positive agreement can be reached – I am equally clear that no deal for Britain is better than a bad deal for Britain,” she said.
Eurosceptic ministers and backbenchers were quick to praise May, but her remarks also triggered a backlash from lead European parliament negotiator on Brexit, Guy Verhofstadt. “Britain has chosen a hard Brexit. May’s clarity is welcome – but the days of UK cherry-picking and Europe a la cart [sic] are over,” he said.
Verhofstadt also delivered a tough response to May’s point about business. “Threatening to turn the UK into a deregulated tax heaven will not only hurt British people – it is a counterproductive negotiating tactic,” he tweeted, urging May to consider the concerns of 48% who voted remain.
Speaking at Lancaster House, London, the prime minister also committed to give both houses of parliament a vote on the final Brexit deal – prompting the pound to soar – although Downing Street was clear that the alternative to a negotiated exit would be defaulting onto the higher tariffs of World Trade Organisation rules.
Setting out her government’s 12 priorities for crunch negotiations with the EU 27, May made it clear that the UK would:
  • Take back control of borders, arguing that record levels of migration had “put pressure on public services”
  • No longer be under the jurisdiction of the European court of justice, because “we will not have truly left the European Union if we are not in control of our own laws”
  • “Explicitly rule out membership of the EU’s single market” because that is incompatible with migration controls
  • Not stay in the customs union, but try to strike a separate deal as an “associate member” to make trading as “frictionless as possible”
  • Not be required to “contribute huge sums to the EU budget” but simply pay towards specific programmes
  • But would seek a “new, comprehensive, bold and ambitious free trade agreement” with the EU, and build trading relationships with countries beyond Europe as part of a “global Britain” strategy
Prominent Brexit supporters said the speech represented a clean break from the EU. Boris Johnson, the foreign secretary, who led the Leave campaign, praised a “fantastic speech” on Facebook. He has been keen for the prime minister to make a clean break with the EU, rather than seeking to remain inside the single market.
The former Ukip leader Nigel Farage said: “I can hardly believe that the PM is now using the phrases and words that I’ve been mocked for using for years. Real progress.”
However, remain supporters in the Conservative party insisted the plan for Britain’s future economic relationship with the EU amounted to “single market lite”. Anna Soubry, who is a key remain supporter, welcomed the “language and tone” of the speech.
“What I am agitated about is that I believe that immigration benefits British business and I think we are making a serious and grave mistake by thinking we can cut the number of migrant workers without damaging our economy,” she added.
This position was echoed by Labour’s Brexit secretary, Keir Starmer, who argued that May was right to attempt to replicate the “attributes of the single market” in a trade deal.
Starmer said May had committed to something that would mimic full membership. “The ball is in her court to deliver. We will hold her to that,” he said. However, he and Labour leader Jeremy Corbyn were deeply critical of the threat to slash taxes, which Corbyn said would turn Britain into a “bargain basement tax haven on the shores of Europe”.
The prime minister said she also wanted to secure the rights of the 3 million-plus EU citizens who live in the UK, suggesting that “one or two” countries, thought to include Germany, had refused to negotiate an early agreement over the issue.
May said she would accept a phased process of implementation of the Brexit agreement after 2019 but not an unlimited transitional deal that could plunge Britain into “permanent political purgatory”.
She also called on leave and remain campaigners to put the divisions of the hard-fought referendum behind them. “The victors have the responsibility to act magnanimously. The losers have the responsibility to respect the legitimacy of the outcome,” she said, claiming that business, MPs and the public wanted to “get on with it”.
Calling for unity in the UK, May said: “Because this is not a game or a time for opposition for opposition’s sake. It is a crucial and sensitive negotiation that will define the interests and the success of our country for many years to come. And it is vital that we maintain our discipline.”
The prime minister attempted to strike a conciliatory tone with the EU by promising to be a “best friend” to the bloc after Brexit. But she also claimed the EU had been too unbending in respecting the needs of a diverse set of nations, and too inflexible for British voters. She urged European leaders to learn from Brexit by not “tightening a vice-like grip that ends up crushing into tiny pieces the very things you want to protect”.
After delivering her speech, May spoke to Jean-Claude Juncker and Donald Tusk, the presidents of the European commission and council, as well as to the German chancellor, Angela Merkel, and French president, Francois Hollande. A Downing Street spokesperson said she had told them that she understood Britain could not remain in the single market but wanted a deal in everyone’s interests, and said they had welcomed clarity and that Tusk was looking forward to “negotiating in a spirit of goodwill”.
Tusk also said it marked the start of a “sad process” but said that at least May was now being realistic.
Other European figures who reacted to the speech included the Czech Europe minister, Tomáš Prouza, who tweeted: “UK’s plan seems a bit ambitious. Trade as free as possible, full control on immigration… where is the give for all the take?”
The Italian newspaper, La Repubblica, added that Britain was not just leaving the EU but also the common market and “everything”. “It appears that Theresa May’s intention through negotiations with the EU at the end of March is ‘a hard Brexit’ – a very hard Brexit indeed.”
One of the biggest challenges for May will be the Irish question. A statement from the Irish government welcomed May’s commitment to retain close relations with the EU, saying it was an ambition they shared. It said it was ready to “intensify” engagement with other EU countries, adding: “Ireland will negotiate from a position of strength, as one of the 27 member states firmly in, and committed to, the European Union.”
Sterling was up nearly 3% to around 1.238 US dollars following May’s speech, although it dipped back to $1.234 in Asian trading overnight. It also rose 2% against the euro at 1.158.
Some Labour backbenchers were despairing about their party’s response, with one passionate remainer describing it as “shambolic”. Others were more constructive.
The former shadow chancellor, Chris Leslie, said Labour couldn’t provide May with an “alibi” for her hard Brexit plan.
“We should be trying to salvage membership of the single market but to throw in the towel and not even try to stay a member of the single market is sacrificing Britain’s economic future,” he said, arguing that some EU countries might accept reforms towards managed migration.
“Italy, Greece, Germany might think about amending that fourth pillar – and not to even attempt to ask them is waving the white flag. This is a massively important market – we need a bit of fight.”
He is planning to lay down an amendment calling for a better deal if the government is forced by the Supreme court to publish an act of parliament before triggering article 50.
Tim Farron, the Lib Dem leader, said it was wrong that there would be no referendum on the final deal. “The people voted for departure, they should be given a vote on the destination. This is a theft of democracy.”
Downing Street sources said the prime minister had discussed the speech with both the leaders of the Scottish and Welsh administrations on Tuesday morning. But despite these conversations, May received an immediate rebuke from Nicola Sturgeon who warned the plan could be “economically catastrophic”.
Claiming that May was being driven by the “obsessions of the hard right of the Tory party”, Sturgeon argued that her demands for a special deal for Scotland were not being listened to.
Sky News
By John-Paul Ford Rojas
23 January 2017
Gloom in Britain’s financial services sector has deepened at its sharpest rate since the financial crisis, a new poll shows.
It comes as global banks consider plans to relocate staff in the wake of the Brexit vote.
A CBI/PwC poll of financial services firms showed optimism fell for a fourth consecutive quarter in the three months to December – the longest run of declines since 2008 – as the sector was hit by uncertainty.
Official growth figures for the October-December period will be published later this week and are expected to show the economy continued to perform robustly despite Brexit fears.
But a slowdown is expected to follow this year, with a new forecast from EY ITEM Club seeing a prolonged period of subdued growth as the UK faces a “hard rebalancing”.
Banks and other financial services firms are making plans for life after the UK leaves the European Union following Theresa May’s confirmation last week that this will mean leaving the single market.
That is expected to make it harder for the City to retain “passporting” rights that allow firms to operate freely across the European Union.
HSBC and UBS issued fresh warnings a day after the Prime Minister’s speech that Brexit could mean each of them moving 1,000 workers out of London.
On Monday, it was reported that US banks Morgan Stanley and Citigroup had identified many roles that would have to be moved out of Britain.
Sources told Reuters that Morgan Stanley would have to relocate up to 1,000 jobs while Citigroup would have to shift 100 positions.
The CBI/PwC poll found only 10% of financial services firms were more optimistic about the overall business situation, with 45% less so – giving a balance of -35%, the worst since the end of 2008.
Andrew Kail, head of financial services at PwC, said: “Uncertainty has contributed to the low levels of optimism reported by many financial services companies, particularly by the banks.”
The EY ITEM Club’s latest forecast pencils in growth of 2% for 2016 followed by 1.3% for 2017 and 1% in 2018.
It points to the slump in the pound – which makes imports more expensive – pushing up inflation and holding back consumer spending
Sterling’s weakness – which helps exports to be more competitive – will mean a “sea change” in the economy, forcing it to be less reliant on consumer spending and more focused on overseas trade, the report says.
By Ben Marlow and Ben Wright
21 January 2017
UK bank bosses have launched a frantic lobbying effort in an attempt to persuade their foreign counterparts to put on hold plans to shift operations to other major European cities.
According to senior City figures in Davos, international banks are being asked to resist moving jobs, “for the good of London”, until it becomes clearer that the UK can hammer out a transitional deal with Brussels.
The campaign is a concerted effort by the UK’s top banks to limit the damage that Brexit could inflict on the City’s status as the world’s premier financial hub. It is expected to be ratcheted up in the wake of the Prime Minister’s “Brexit blueprint speech” last week.
It is understood the move is being spearheaded by prominent City figures John McFarlane, chairman of Barclays and Shriti Vadera, former Labour business minister and Santander UK chairman, through the European Financial Services Chairmen’s Advisory Committee, a lobby group formed following the EU referendum.
Negotiations are being handled by Robert Rooney and Michael Cole Fontayn, the European chiefs of Morgan Stanley and BNY Mellon respectively.
A source close to the talks said: “We are trying to get a permanent agreement for banks with London operations to access the EU. If we can’t do that, what we’ve asked for is a three-year standstill agreement. We don’t want to trigger contingency plans in advance because of a lack of certainty so we are saying ‘hold on’.” Last Tuesday, Theresa May revealed that the UK will leave the single market. After the EU referendum vote, the majority of City figures had lobbied for the UK to remain in the trading bloc, which would provide the easiest means for them to continue to provide their services to EU clients.
Banks have more recently expressed hope that the UK and the EU will be able to agree a transitional deal to ensure that the rules under which they operate remain unchanged between the end of the Article 50 process and the adoption of whatever trade arrangements the UK eventually agrees.
The mood among banking bosses assembled at the annual gathering was overwhelmingly pragmatic. Many said Mrs May’s speech had delivered a higher level of certainty and that they now had to get on with making Brexit work for the City.
Bankers have moved from talking about a “transitional” period, instead labelling it an “implementation” or “stability” period, mirroring the language and rhetoric being used by the UK Government.
The positive mood was boosted by an apparent warming of relations between the UK and Germany. Wolfgang Schäuble, the German finance minister, said: “London will remain an important financial centre for Europe.”
Jes Staley, the chief executive of Barclays, said he did not think that the UK or the EU would use Brexit as an excuse to roll back the global financial framework that has been implemented since the financial crisis.
23 January 2017
When is the ruling?
The Supreme Court is to give its judgment in the legal battle over Brexit on January 24.
The highest court in the land will decide whether to reject or allow a Government appeal against a High Court ruling which blocked the royal prerogative being used to trigger Britain’s exit from the European Union without Parliament having a say.
The ruling was won by campaigners led by investment manager Gina Miller and hairdresser Deir Dos Santos.
In a case of major constitutional importance, three High Court judges unanimously decided last November that Prime Minister Theresa May did not have authority to use Crown “prerogative powers” to invoke Article 50 of the Lisbon Treaty to start the two-year process of negotiating the UK’s departure from the EU.
The Government is asking a record 11 Supreme Court justices to overturn the decision and rule the use of prerogative powers did not interfere with the sovereignty of Parliament.
The decision will be handed down at 9.30am.
Why is it important?
There have been some concerns that the decision might delay Brexit. This is because if the court rules that Theresa May must seek the permission of Parliament before she triggers Brexit the Government will be forced to take a bill through the House.
The bill is likely to be short and worded in such a way that reduces the chance of it being amended and therefore delayed by MPs in the House of Commons who do not want the country to leave the EU.
Although most MPs have said they will back the bill, some have warned that they will use debates in the House to try and elicit more information from the Prime Minister about what Brexit might look like.
Some emergency legislation can be forced through the Commons in weeks, but this bill will not meet those criteria.
Instead sources close to the Government suggest it could take months to win support, which could throw the Prime Minister’s March 2017 timetable off track.
What were the arguments?
Ms Miller’s legal team argued that because triggering Article 50 would revoke the legislation which took Britain into Europe, it would require an Act of Parliament to leave the EU.
Government lawyer James Eadie QC told the Supreme Court that the motion in favour of triggering Brexit by March 31 was “highly significant” and provides “the sharpest of focus” for the judges’ decision.
Addressing the 11 justices at the end of a four-day hearing, Mr Eadie said of the vote, which was carried by a 372 majority: “It may not be legally binding but that does not mean it is not legally relevant, because Parliament has given specific approval to the Government to give that notice.
“Parliament has indicated its view and has done so clearly.”
The Government is appealing against a High Court ruling that it must pass an Act of Parliament to invoke article 50 of the Lisbon Treaty – which gives the EU notice of Britain’s intention to leave – rather than using prerogative powers.
Mr Eadie said legislation was not necessary “to confirm that which the House of Commons has already called upon the Government to do”.
By Jennifer Jacobs and Margaret Talev
21 January 2017
The Trump administration will lay the groundwork this week for a trade deal between the U.S. and the U.K. that would take effect after Britain leaves the European Union, a White House aide said, as Prime Minister Theresa May becomes the first foreign leader to visit the new president.
May last week declared Britain is “open for business” as she announced plans to pursue a clean break with the EU, paving the way for the U.K. to eventually strike new trade accords with the continent and other countries. May said she will travel to Washington and speak to President Donald Trump on Friday.
“We’ll have an opportunity to talk about our possible future trading relationship, but also some of the world’s challenges that we all face — issues like defeating terrorism, the conflict in Syria,” and NATO, May said in an interview on the BBC’s “Andrew Marr Show” on Sunday. “When I sit down with Donald Trump, I’m going to be talking about how we can build on that special relationship.”
Trump officials believe their discussions with May’s government encouraged her to be more aggressive in exiting the EU. She can use any American support to argue the U.K. will prosper outside the bloc although she risks inflaming tensions with European leaders if they suspect her government is actively negotiating trade deals while still an EU member.
Johnson Meetings
Two of President Donald Trump’s senior advisers, Steve Bannon and son-in-law Jared Kushner, met with U.K. Foreign Secretary Boris Johnson in New York on Jan. 8. The three are preparing for the future pact, the aide said, requesting anonymity because the discussions aren’t public.
Read more: What Makes a ‘Hard Brexit’ Harder Than a Soft One
Bannon, Trump’s National Security Adviser Michael Flynn, and other administration officials have also met with British defense and intelligence leaders, the aide said.
President Barack Obama warned in April that if the U.K. pursued Brexit, the country would go to the “back of the queue” for U.S. trade deals. U.K. voters chose to leave the EU anyway in a June referendum, and Trump now appears to be scrapping Obama’s position on the matter.
Trump’s team is also considering a deal to reduce barriers between U.S. and British banks, the Sunday Telegraph reported, citing officials from both sides.
U.S. Envoy
Trump has tapped Woody Johnson, the billionaire owner of the New York Jets NFL team, to serve as U.S. ambassador to the U.K., a person familiar with the matter said on Jan. 19.
May and Mexican President Enrique Pena Nieto will make visits to the U.S. this month to meet with Trump, administration officials said.
May will meet with Trump on Jan. 27, White House Deputy Press Secretary Sarah Huckabee said on Saturday. Pena Nieto will meet with Trump on Jan. 31, said Press Secretary Sean Spicer. Neither provided further details on the meetings.
Trade, immigration and Trump’s campaign promise to build a wall on the southern U.S. border loom large in the president’s relations with Mexico. Brexit, the campaign against Islamic State terrorism, the Syrian civil war and sanctions against Russia are key issues in relations between the Trump administration and Britain.
The Guardian
By John Longworth
23 January 2017
Now the prime minister has set out her agenda for Britain leaving the European Union, it provides an opportunity to turn our minds to what it will take to generate jobs, raise living standards and make Britain an even more prosperous and dynamic economy. In short, to make the UK the best place in which to do business.
While there has been much hand-wringing and angst about the upcoming negotiations, they pale into insignificance beside the manifest economic benefits that will flow from Brexit – if the government does the right thing. To this end, the government should now plan to ensure the country can take full advantage as soon after Brexit day as possible.
We should aim to remove tariffs, either unilaterally or through free trade negotiations, thus reducing the cost of food by up to 40%, and the cost of clothing and footwear by up to 20%. With a reduction in other input tariffs, this would be an enormous boost for those “just about managing”. It will free up consumer spending, helping inflation and the economy at large. We should compensate business for any tariffs erected through the tax regime, at a cost of less than half of our EU net contribution, and we should have signature-ready trade deals and a deregulation programme prepared for Brexit day. This is work that must start now.
All the benefits of Brexit are entirely independent from the single market and the customs union, except in so far as membership of these prevents us from crystallising them. There is also a potential and massively important fringe benefit of Brexit, in that the government will now have to do the things that George Osborne failed to deliver and which have been resisted by the City-dominated Treasury for so long.
We need to rebalance the economy, and from this imperative government no longer has a hiding place. Our new freedom and EU contribution monies mean the government, at last, has the mandate and the resources to support our small and medium-sized exporters, and not be transfixed by the often protectionist multinationals. We must invest in universities and research and development and actually build infrastructure, not just talk about it. Seek the lowest-cost sources of energy rather than burdening consumers with massive bills. Provide non-equity loan capital and finance for entrepreneurs, growing firms and the tech sector, even if it means the City turning a buck less.
Immigration must be cut, but not at the expense of talent and jobs. Bone fide university students should be assessed for immigration at the point of graduation, not entry – after all, education is a service sector “export” as much as selling Burberry handbags, and creates a network around the world and a pool of talent for business. We want the brightest and the best in this country, alongside investment in the development and training of our young people to ensure they are as employable as possible. It is shameful that we have nearly 600,000 unemployed under-25s.
There are important things that the exit negotiations need to resolve: visas, residency, open skies. But the really important things are not EU trade arrangements – they would be nice to have but are not essential. The real benefits of Brexit will be a considerable chunk of GDP – and that’s without including the trade deals we will do with the rest of the world. Additionally, the rebalancing of the economy and making Britain the best place in which to do business will produce a boom in economic growth, investment and trade. By contrast, the cost of not having the trade arrangements with the EU – having tariffs imposed – are minor. Less than half our net contribution.
And all this is quite apart from the political and constitutional imperative for a clean break: freedom to make our own laws subject to our own courts and with control of our own borders – the very things that define a nation state and for the preservation of which our forebears paid a high price in blood and treasure.
Certainly we should not spend too much time on fruitless negotiations, we should instead be devoting more energy to looking forward, preparing for our freedom and the opportunity to be a vibrant, free-trading, enterprise nation.

Brexit pound slump hits consumers as UK inflation soars to 1.6 per cent

Evening Standard
By Jonathan Prynn
17 January 2017
The slump in the pound that followed the Brexit vote “has started” to fuel higher prices on the high street, officials admitted today as inflation leaped to its highest rate for two and a half years.
The Consumer Prices Index – the Government’s headline measure of inflation – jumped to 1.6 per cent in December, much faster than forecast by City analysts, and up from 1.2 per cent in November.
A big jump in the cost of air fares and monthly increases in food and petrol prices were largely to blame for the rise, according to today’s data from the Office for National Statistics.
Government statisticians said that a combination of more expensive imports and the resurgent oil price “may now be feeding into food manufacturer output prices and consumer prices for food products.”
Food prices are still down year on year but rose 0.8 per cent in December and now show a clear upward trend after two years of shopper pleasing deflation that was largely the result of supermarket price wars.
Staples such as vegetables, bread and cereals, oils and fats, sugar, jam, chocolate and sweets all went up in price during December.
Mark Billige, UK managing partner of pricing consultants Simon-Kucher said:“Over recent years the supermarket price war has been a huge influence on the economy, keeping the price of shopping down and hence keeping inflation down.
“We will be fortunate if this is still the case in 2017 given the cost increases they face.”
Mike Prestwood, head of inflation at the ONS, said: “This is the highest CPI has been for over two years, though the annual rate remains below the Bank of England’s target and low by historical standards.
“Rising airfares and food prices, along with petrol prices falling less than last December, all helped to push up the rate of inflation.
“Rising raw material costs also continued to push up the prices of goods leaving factories.”
There was more bad news for Londoners looking to get on the housing ladder as house prices jumped 1.8 per cent in November alone, lifting the annual rate to 8.1 per cent and the average to £481,648.
Tom Stevenson, investment director for personal investing at financial giant Fidelity International, said: “Inflation is back with a vengeance.
“The weakening pound continues to drive prices higher and today’s CPI reading of 1.6 per cent on the back of rising fuel, food and air fares is significantly higher than expected.
“With more hints from the UK Government that a hard Brexit is on the cards, we could see sterling fall even further in the lead up to the Prime Minister pulling the trigger on Article 50.
“This will translate into further inflation in the short term. Indeed, some of Britain’s biggest retailers have already warned that they may have to raise prices as they are forced to pass on higher costs of importing goods from abroad to customers.”
Richard Lim, chief executive at consultants Retail Economics said: “The cost of living is rising at the fastest pace in over two and a half years as the impact of weaker sterling begins to feed through to consumers.
“Rising food inflation will be one of the areas families feel the pinch first and with many households ‘just about managing’, discretionary spending power will come under intense pressure – especially for the least affluent.
“Indeed, we forecast inflation to rise to three per cent in 2017 which is expected to plunge real earnings into reverse by late summer.”
Conor D’Arcy, Policy Analyst at the Resolution Foundation think tank, said: “It will be years until we see the overall economic impact of Brexit, but the one dead cert in 2017 is rising inflation – fuelled by a sharp fall in the pound.
“With nominal pay only expected to rise by 2.4 per cent in 2017, the risk is we see a fresh pay squeeze with rising prices eating up all pay growth by the end of the year.”
By Josie Cox
16 January 2017
Merger and acquisition activity in the UK is likely to slip dramatically this year as a result of Brexit-induced uncertainty, a report published by Baker McKenzie shows.
The law firm predicts that the total value of M&A activity in the UK will reach just $125bn in 2017, a more than 60 per cent slump from the $340bn of deals seen in 2016.
Activity in the UK in 2016 was largely propped up by a slew of mega deals, including AB InBev’s $101bn takeover of SAB Miller, Shell’s takeover of BG Group for $69bn, Softbank’s acquisition of ARM Holdings for $32bn, Visa’s reacquisition of Visa Europe for $21bn, and BT’s acquisition of EE for $19bn.
But looking ahead, Baker McKenzie says that the pace and size of transactions will slacken — mostly as a result of uncertainty around Brexit.
“We expect weaker economic growth in the UK and uncertainty about the relationship UK companies will have with the rest of Europe to dampen M&A activity,” experts write in the report.
“The UK government plans to activate Article 50 by March, triggering negotiations with the EU on the terms of Brexit that could last up to two years,” they add.
The firm says that M&A activity in sectors such as finance and industrials are most at risk in the event of difficult Brexit negotiations. Volumes in those sectors will likely remain low for all of 2017.
Monday’s predictions mark a sharp revision from Baker McKenzie’s previous forecasts.
In June, the group anticipated that UK M&A activity would peak at $265bn in 2017 and reach $202bn in 2020.
For the broader Eurozone, Baker McKenzie is more confident.
European M&A activity fell to $319bn in 2016, down sharply from US$736bn in 2015.
“The UK’s vote to leave the EU hurt investor confidence, along with other concerns about the Eurozone’s stability, including the fragility of the Italian banking system,” they write.
“However, the Eurozone recovery appears to be on firmer footing moving into 2017, and barring a disorderly Brexit or further political shocks during the presidential elections in France and Germany, growth looks strong,” they add.
The firm expects M&A deal making in non UK-Europe to rise to $459bn in 2017, and peak at $613bn in 2018, “aided by the European Central Bank’s low interest rates and further weakening of the euro/dollar exchange rate, which will boost manufacturing competitiveness.”

Select Milano Monitor 15/01/2017

Mondo Visione
12 January 2017
On 9 January 2017 Italy’s financial regulator (CONSOB) established a new body called the Arbitration for Financial Disputes.
Disputes up to €500k can now be submitted to it, and all submitted disputes will aim to be resolved within 6 months.
The new body has been established to create a fast and low cost method to resolve financial disputes that take place in Milan.
The measure was advocated by Select Milano as part of a programme of reforms to make Milan an attractive location for businesses which will need to relocate out of London as a result of Brexit.
Commenting on the development Bepi Pezzulli, Chairman of Select Milano said: “This is another step in the right direction to make Italy more competitive and business friendly. By creating this arbitration body, Milan is offering institutions based in Milan the ability to access quick and efficient dispute resolution and a legal and judicial ecosystem similar to the one in London.  Combined with the other reforms we have helped achieve, Milan is now one of the most attractive locations for businesses in Europe”
In addition to the establishment of Arbitration for Financial Disputes, other Select Milano proposals that have resulted in legislation include reforms to the “brain redux” law, amendments to capital gains tax and the creation of the European Economic Interest Grouping (EEIG).
Bepi Pezzulli added, “We are in active dialogue with institutions considering where to locate parts of their business which may need to move as a result of Brexit.  Milan is a natural home for Euroclearing given the existing market infrastructure in place and we hope to see further progress in these discussions over the coming months.”
By Mike Fox
12 January 2017
It was announced this week that Italy’s financial regulator (CONSOB) has established a new body called the Arbitration for Financial Disputes and disputes up to €500k can now be submitted to it, and all submitted disputes will aim to be resolved within 6 months.
The new body has been established to create a fast and low-cost method to resolve financial disputes that take place in Milan.
The measure was advocated by Select Milano as part of a program of reforms to make Milan an attractive location for businesses which will need to relocate out of London as a result of Brexit.
Commenting on the development Bepi Pezzulli, Chairman of Select Milano said:
“This is another step in the right direction to make Italy more competitive and business friendly. By creating this arbitration body, Milan is offering institutions based in Milan the ability to access quick and efficient dispute resolution and a legal and judicial ecosystem similar to the one in London. Combined with the other reforms we have helped achieve, Milan is now one of the most attractive locations for businesses in Europe.”
Italy’s financial regulator has been on a string of public warnings lately regarding unregulated brokers targeting Italian citizens, the latest of which came back in December when 10 new brokers were warned against.
By Valentina Ieva
11 January 2017
The capital city of Lombardy is qualifying as the bridge between the Eurozone and the UK capital. Frankfurt, Paris, Luxembourg and Dublin are its competitors to get London’s inheritance. Diplomatic and legislative efforts are needed to defeat the other bidding cities. After Britain’s leave last June, manoeuvres started to get hold of London’s future.
Of course, London is trying to open up to design by introducing the first London Design Biennale edition (coming with the London Design Festival in September). A new format drawing inspiration from Venice’s Biennale maybe to dispel the referendum troubles with creativity.
But Italy has the Milan Furniture Fair: a continuously expanding and evolving design fair, specially because of the October Moscow and the November Shanghai editions.
Set aside the Expo. It brought 21 million visitors and it acted as a catalyst for important projects and infrastructure among which the metro third line completion and the remaking of some of the Navigli areas. So not only the capital city of fashion, night-life and haute cuisine: the Gran Milan surely qualifies to yearn for the title of Europe’s Capital City.
Since the 2013 legislation facilitated the visas and allowed for enterprises to sign more flexible contacts, the city is attracting european and international start-ups more than ever. The trend before Brexit was to open up in London.
“Brexit isn’t good news per se and it isn’t good news for Europe”, Milan’s mayor Giuseppe Sala stated during his first public appearance at the 242 anniversary of the foundation of the Finance Guards – “but I’m pretty sure it’ll become an opportunity for Milan” – he added.
Meanwhile, Italy is working with its Select Milano committee made up of finance professionals and academics. Select Milano, since the Brexit, has developed the idea of the development of a business diplomacy to define a new economical paradigm and to establish a new set of commercial relations between Italy and the UK. The aim is to involve Milan and the City to develop a Eurozone financial district in Milan and to enable communication between central and local governments to work out new tax breaks and adequate measures to avoid the country risk.
As the president of the AIBE (the Association of the Foreign Banks in Italy) stated in an interview for the Corriere della Sera: “It is clear that there will be consequences. London messed herself up!”
La Repubblica
By Raffaele Ricciardi
12 January 2017
Summary from Italian:
  • This article discusses the resolution currently in the Finance Committee which will seek to help bring the Euro clearing market to Milan. The market handles €570bn per day, and counts 11k in staff numbers and as such would be highly significant for Milan to capture.
  • Deputy Gregorio Gitti says that there’s a limited time frame to make this happen in Milan. Gitti, along with other Deputies Maurizio Bernardo and Alessandro Pagano, is leading the drive for the Euro clearing resolution in the parliamentary Finance Committee. They expect it to pass sometime this week.
  • Select Milano’s role in this is mentioned, with Bepi Pezzulli noting that they do not fear the competition of Frankfurt and Paris as Italy is taking such positive steps in the right direction to make this happen. He also notes that Milan can act as an answer to the populists who claim Europe is just centred on Germany.
  • It is noted that the government has already secured the brain redux and tax incentive resolutions, so its commitment is clear. The new arbitration department within the CONSOB is another great step. After the EEIG resolution, the final piece to the puzzle will be the creation of the Milan Financial District itself which will be taken up by the Economic Development Ministry.
  • In terms of infrastructure, Milan already has its own chamber for clearing activities that works with €10bn in transactions daily. Other infrastructural investments underway include a more direct route to the airport.
Milano Finanza
By Pasquale Merella
14 January 2017
Summary from Italian:
  • Brexit went from being a risk to a problem to an opportunity. Various European cities are vying to become London’s successors in a post-Brexit world including Frankfurt, Paris, Dublin, Luxembourg and even Stockholm.
  • In Milan, the movement to snag the European Medicines Agency is already underway. In addition, many (including Select Milano) are campaigning for the Euro clearing market to be transferred there, bringing long-term economic growth and industrial development, among other benefits.
  • The European Market Infrastructure Regulation (Emir Directive) needs quick answers to questions of risk — Milan’s solution is the creation of the Financial District which will help realise the Industry 4.0 plan.
  • In a positive development, the issue of the historic slowness of the Italian justice system is solved with the new CONSOB arbitration body.
By Luca Zorloni 
9 January 2017
Summary from Italian:
  • This article discusses Milan’s movement to create a financial district and establish a bridge between London and the Eurozone post-Brexit, competing against other cities like Frankfurt, Paris, Luxembourg and Dublin to gain business.
  • Finance Committee Chair Maurizio Bernardo is quoted as saying that key financial operators and intermediaries risk losing their EU passporting rights and should move within the Union.
  • Select Milano’s work in particular is noted, with a quote from Bepi Pezzulli on some of the incentives and measures proposed like the brain redux law and the EEIG formation.
  • Deputy Gregorio Gitti is also quoted, discussing the importance of the role of arbitration to the EEIG. He also states that the government can work to make Milan even more competitive through tax incentives which will drive international business figures to Milan.
  • The power to make this happen is now in the hands of government which will vote early this year on the Finance Committee’s resolutions regarding the Milan Financial District.
  • The article finishes with Bepi Pezzulli suggesting more effective city marketing by Milan in four branches  –  Visit Milan, Study in Milan, Work in Milan and Invest in Milan.
  • This article also features on Edilportale.
Revue Banque
13 January 2017
Summary from French:
  • A summary of the cities vying for post-Brexit business in the asset management industry, mentioning in particular Dublin, Luxembourg, Paris and Frankfurt, with Berlin, Amsterdam and Milan listed as secondary contenders (due to tax advantages and existing infrastructure in the primary contenders). It is noted that banks with operations in London are primarily concerned about the loss of passporting rights and divergences in regulation.
  • Milan’s “soft” approach stands out as its strategy involves twinning Milan with the City and creating a financial citadel which replicates the fiscal, administrative and legal ecosystem of London.
eFinancial Careers
By Thierry Iochem
12 January 2017
Summary from French:
  • Analysis of the purported top contenders for gaining post-Brexit financial business — Frankfurt and Paris. Frankfurt is noted as besting Paris in macroeconomic health, suitability as a financial centre, proximity of regulators, taxation and labour laws, salaries, cost of living and knowledge of English.
  • Paris bests Frankfurt in city marketing effectiveness, number of banks, efficiency of regulators, infrastructure, lifestyle and FinTech.
  • Bepi Pezzulli is quoted in the section which discusses the differences in taxation and labour laws between Frankfurt and Paris: “Paris has got a very high tax rate and its labour legislation is a nightmare.” This quote was taken from last week’s Financial News piece.
Milan and Brexit:
Milano Today
14 January 2017
Summary from Italian:
  • In Milan’s movement to attract the European Medicines Agency post-Brexit, its candidacy may now be at risk as the agency may move sooner than expected, with its budget hinting at a transfer within the next year.
  • As Milan’s Expo area, which the city had previously offered as the headquarters for the Agency, would not yet be ready for use by the time of transfer, the former Falck headquarters in Sesto San Giovanni has been offered up instead. However, even this will not be ready before end-2017. A temporary headquarters is being sought out to house the EMA’s 600 workers in case Milan is chosen.
  • AdnKronos reports that Milan Mayor Giuseppe Sala and Lombardy Region President Roberto Maroni have written a letter to Prime Minister Paolo Gentiloni to urge him to take political action to secure the EMA in Milan.
Europe and Brexit:
By Zlata Rodionova
11 January 2017
The chief executive of the London Stock Exchange has warned the UK’s vote to leave the EU poses a risk to the global financial system and could cost the City of London up to 230,000 jobs if the Government fails to provide a clear plan for post-Brexit operations.
Speaking to MPs on the Treasury Select Committee, Xavier Rolet said LSE customers simply “would not wait” for clarity over Britain’s divorce from the EU before moving.
He said: “I’m not just talking about the clearing jobs themselves which number into the few thousands.But the very large array of ancillary functions, whether it’s syndication, trading, treasury management, middle office, back office, risk management, software, which range into far more than just a few thousand or tens of thousands. They would then start migrating.”
If the City did lose its ability to clear transactions denominated in euros – which was a contentious issue even before the Brexit vote – Rolet said 232,000 roles could be lost, citing research by consultants Ernst & Young for the LSE.
His comments came as Douglas Flint, the chairman of HSBC who is also giving evidence to the Treasury Select Committee, said more clarity is needed on Brexit negotiations to prevent companies including his own firm from moving thousands of jobs out of London.
He said banks did not want to move operations outside London but they had to plan for the worst.
Ahead of the EU referendum in June, HSBC said it could move 1,000 roles to its operations in Paris.
Mr Flint confirmed on Tuesday that the same number of roles was still at risk and that HSBC was ready to take “pre-emptive action”, pointing out that the bank also had operations in Ireland and the Netherlands.
He compared the London’s financial system to a “Jenga tower”.
He said: “You don’t know what will happen if you pull one small piece out — it might have a big impact.”
Together with Elizabeth Corley, of Allianz Global Investors, who was also speaking in front of the committee, the three City bosses all called for clarity on “transition arrangement” in the next eight to 12 weeks.
“I think there is a way to turn this process into a positive for both [the UK and the European] economies,” Mr Rolet said, adding however that a period of stability is essential.
City companies fear that a hard Brexit will result in the UK leaving Europe’s single market which could signal the loss of crucial passporting rights, that currently allow them to sell their services freely across the rest of the EU and give firms based in Europe unfettered access to Britain.
Companies are pressing Britain and the EU to agree on a transition deal that would keep many of the current arrangements for up to five years, helping to cushion them from the effects of Brexit.
A cross-party group of peers, in December, said Britain’s financial sector must be offered a “Brexit bridge” to prevent companies moving to rival locations such as New York, Dublin, Frankfurt or Paris.
However, on Sunday, Prime Minister Theresa May said Britain cannot expect to hold on to “bits” of its membership with the EU after Brexit, suggesting The UK is heading towards a hard Brexit.
The pound fell to a 10-week low following Ms May’s interview.
By Leigh Thomas
12 January 2017
The Bank of France is seeing serious interest from international firms looking to boost their activities in Paris following Britain’s Brexit decision, the French central bank’s governor said on Thursday.
In a New Year’s address to the Paris financial sector, Francois Villeroy de Galhau said the industry had to remain mobilised in efforts to attract business to the French capital.
“We have signs of very significant interest from international firms with which we are discussing discretely but seriously,” Villeroy said.
By Joe Mayes
13 January 2017
Brexit is pushing up house prices in Frankfurt as buyers expect wealthy professionals to move there from London, according to research by Deutsche Bank AG.
“Impetus from the Brexit vote caused prices to surge in 2016,” the report published Friday said. “Probably in anticipation of wealthy London bankers moving to the city, prices for family homes rose particularly sharply.”
Frankfurt, an established financial capital at the heart of Europe’s biggest economy, has been touted as a potential beneficiary of Brexit as financial institutions consider shifting operations out of London to retain European market access. The city is home to the European Central Bank and hopes to become the new headquarters of the European Banking Authority, the regulator currently based in the U.K. capital.
Prices for family homes in Frankfurt are up 11.75 percent year-on-year, compared to a 6 percent increase across the country’s other major cities, the report said.
“Because of the high level of migration to Frankfurt, rents and prices are expected to continue to rise rapidly over the coming years,” the report said.
By Andrew MacAskill and Anjuli Davies
Banks with large London operations say they will step up lobbying European officials because they are running out of arguments to convince the British government the industry needs single market access after Britain leaves the European Union.
Banks have focussed on pressuring British officials to push for as much market access as possible since voters decided seven months ago to leave the EU. They held fewer meetings with European officials, according to several senior sources in the financial services industry.
The focus is shifting because after scores of meetings and research reports, banks, which say they may begin moving staff and operations out of London in the next few months if there is no clarity, feel they are running out of new points to make.
Prime Minister Theresa May said on Sunday she was not interested in Britain keeping “bits” of its EU membership, interpreted by some as signalling she will favour immigration controls over access to the single market.
Banks are now planning a new round of lobbying to highlight how a hard Brexit could harm the EU and the UK. They have identified French politicians, EU regulators and government officials, as key groups to win over.
“The battle for Britain is over, the battle for France is about to begin,” said one senior lobbyist.
Another senior lobbyist for one of the major global banks said he will spend more time in Brussels this year to target the EU’s chief Brexit negotiator Michel Barnier and his teams as well as Didier Seeuws, a Belgian diplomat, who is helping coordinate the Brexit negotiations.
Another lobbyist said he is planning to visit Paris to meet with French politicians and regulators later this month.
Britain’s position as Europe’s financial centre is emerging as one of the main collision points in the Brexit talks. Some European politicians see an opportunity to challenge British dominance of finance after decades of viewing its free-wheeling “Anglo-Saxon” model of capitalism with suspicion.
EU leaders like French President Francois Hollande have said they plan to weaken Britain’s grip on finance by, for instance, demanding the lucrative business of clearing euros should move to the euro zone.
Finance is Britain’s most important industry, accounting for about a tenth of its economic output and is its biggest source of business tax revenue.
But Britain also acts as “the investment banker for Europe”, Bank of England Governor Mark Carney said in November, with more than half the equity and debt raised for European governments and companies done in the UK.
Banks will argue that Europe depends on the strength and the depth of the financial sector in London to service its economy and companies. If access to the EU is cut off, regional financial stability could be in jeopardy, they will say.
UK-based banks had total outstanding loans of more than 1.1 trillion pounds to European companies and governments at the start of 2016.
The British government has also privately appealed to financial organisations to make their case in Europe if they want a transitional period where their ability to operate in the EU would be phased out gradually over several years.
Finance minister Philip Hammond told a meeting of finance executives at the end of November they should lobby European governments if they want to secure a post-Brexit transitional deal, according to two people who were present.
Hammond made the comments at the annual dinner of the All-Party Parliamentary Group on Wholesale Financial Markets and Services, attended by executives from the major British and international banks, according to the people who attended.
“He basically said we need a transitional deal to avoid a cliff edge effect, but the EU also needs to argue for it,” one person at the dinner said. “He was implying that we need to help the government prepare the ground.”
A Treasury spokesman, when asked for comment, reiterated Hammond’s previous statements to lawmakers that Europe will harm itself if they use Brexit to undermine London’s position as the region’s principal financial centre.
Bankers say more work is needed on forging a consensus between Britain and Europe on what any transitional deal may look like. European officials say they will not discuss such a deal before Britain triggers Article 50 of the EU’s Lisbon Treaty to start the process of leaving the EU.
“Everyone has a different definition of what it means in Europe and within Whitehall. We’re trying to get a common view on what transition means,” one of the lobbyists said.
The British government’s relationship with business has gradually improved after months of friction after the vote.
It hit a low point during the Conservative party conference in October when May attacked a “rootless” international elite and officials privately suggested banks would get no special favours in the Brexit negotiations.
Nevertheless, banks feel they have largely finished putting forward their case for single market access.
“We feel we’ve been lobbying the UK government to death. We’ve presented every piece of evidence, every report, research, you name it,” one of the lobbyists said.
“We’ve been repeating ourselves for a month or two now… What else do they really need from us now?”
One government official, who asked not to be named, said regular dialogue with the finance sector will continue, but the number of meetings may reduce.
“The door is open if people want to talk to us. There is not an arbitrary point at which speaking to people is no longer helpful,” the person said. “But it has been intense, as we wanted it to be, and that intensity may ease.”
The News Poland
10 January 2017
The Polish government is considering applying for the transfer of two key EU agencies from London to Poland, the Rzeczpospolita daily has reported.
The agencies, the European Banking Authority (EBA) and the European Medicines Agency (EMA), will have to be moved from the British capital following the country’s exit from the European Union, which could take place by 2019.
The European Banking Authority was created six years ago in order to supervise the financial stability of the whole bloc.
The European Medicines Agency was formed 22 years ago but is equally important – notes Rzeczpospolita- as it approves the introduction of new medicines onto the EU market.
“Our Brexit-effect team has established the benefits of locating those institutions in Poland,” Polish European Affairs Minister Konrad Szymański told the daily.
“Our analysis must be thorough and determine what the impact of the transfer would be for the business, scientific and academic sectors,” he added.
The relocation idea has already enticed several EU member states, with Paris, Frankfurt, Milan, Luxembourg and Vienna interested in hosting the European Banking Authority, and Denmark, Spain, Italy, Ireland and France eyeing the European Medicines Agency.
According to Rzeczpospolita, applying to Brussels to relocate the EBA and EMA to Poland would be a strong signal of a more pro-European stance by the ruling Law and Justice (PiS) party after months of tensions between Warsaw and Brussels. The move must be approved by the entire government.
The Guardian
By Jennifer Rankin
13 January 2017
The EU’s chief negotiator in the Brexit talks has shown the first signs of backing away from his hardline, no-compromise approach after admitting he wants a deal with Britain that will guarantee the other 27 member states continued easy access to the City.
Michel Barnier wants a “special” relationship with the City of London after Britain has left the bloc, according to unpublished minutes seen by the Guardian that hint at unease about the costs of Brexit on continental Europe.
Barnier told a private meeting of MEPs this week that special work was needed to avoid financial instability, according to a European parliament summary of the session. “Some very specific work has to be done in this area,” he said, according to the minutes. “There will be a special/specific relationship. There will need to be work outside of the negotiation box … in order to avoid financial instability.”
Barnier later moved to clarify his comments, claiming on Twitter that he referred to a “special vigilance” required to ensure the EU remained financially stable after Brexit.
The remarks hint at concern among senior Brussels policymakers about the damaging consequences of Brexit for the continent if Europe’s biggest financial centre is cut adrift.
A spokesman for the European commission insisted that the minutes, which were drawn up by European parliament officials, did not “correctly reflect what Mr Barnier said”. A source present at the meeting, however, described the minutes as “more or less accurate”. Barnier discussed the problems of financial services, the source said, although the negotiator’s preferred options were not clear.
The suggestion recorded in the minutes does mirror the view of the governor of the Bank of England, Mark Carney. He told MPs on Tuesday “there are greater financial stability risks on the continent in the short term, for the transition, than there are for the UK”.
Carney said other EU nations relied heavily on the City for their financial needs and could face serious problems if international banks based in London were no longer able to gain easy access to European countries and corporations. “If you rely on a jurisdiction [the UK] for three-quarters of your hedging activities, three-quarters of your foreign exchange activity, half your lending and half your securities transactions, you should think very carefully about the transition from where you are today to where the new equilibrium will be,” he said.
The fear is that European governments and companies would find it harder and more expensive to raise capital if they were denied access to the City, which acts as Europe’s investment bank. Countries such as Italy, with very large national debt, are concerned that their economies would become even more fragile if financing costs rose.
The minutes indicate that Barnier repeated during Thursday’s meeting the well-worn mantra that the UK should not be allowed to cherry-pick the bits of the EU it likes. But his apparent concern about financial instability contrasts with bullish statements by EU leaders about swooping on London’s financial sector business.
In the days after the EU referendum, French president François Hollande said London should no longer be allowed to handle any transactions denominated in euros. These “euro clearing operations” are worth about $150tn a year. Some cities, including Paris and Frankfurt, have launched glossy marketing campaigns aimed at persuading bankers to leave the City of London.
Behind the scenes, EU officials are maintaining that the UK will be hardest hit by Brexit, but they are concerned about the costs facing continental Europe.
One senior source recently told the Guardian that closing London as a euro clearing centre was likely to increase costs for EU banks and companies. Another source has voiced concern that there would be limited gains for rival financial centres as a result of a smaller European single market.
On Friday, one the City’s most senior bankers welcomed growing recognition of the risk to the global financial system. “The industry and the regulatory community, and the political community, are fully aware of the importance of maintaining financial stability,” said Douglas Flint, chairman of HSBC, Europe’s largest bank.
“There are clearly negotiating positions that will evolve over the next several months and years but the importance of preserving the functionality of the markets that exist today … is seen by everybody,” he said, following similar warnings to the Treasury select committee.
Flint suggested a new special relationship with the City could be achieved with a treaty guaranteeing “mutual recognition” of regulations. City firms are able to do business across the EU by using a “passport”, which will disappear when the UK quits the EU.
Barnier, a former EU commissioner in charge of financial services who led the post-crisis crackdown on bankers’ bonuses, is well placed to understand the financial risks of Brexit.
According to TheCityUK, the lobby group representing the the City, London is Europe’s biggest financial centre: 75 EU banks have major branches in the capital, holding £1.2tn of assets, almost one fifth of all UK bank assets. Twice as many euros are traded in London than in the 19 countries of the single currency combined.
Carney is increasingly becoming embroiled in a war of words with his continental colleagues over who faces the biggest Brexit risks.
Earlier this week, Malta’s finance minister, Edward Scicluna, said that the UK would suffer greater damage, although the rest of the EU would also suffer.
Barnier, according to the minutes of the meeting with MEPs, described Brexit as a “unique and extraordinary negotiation” that had to result in a outcome that showed the best option was being an EU member. He stressed there would be “no aggressiveness, no revenge, no punishment” but also no naivety.
Both lines are consistent with his only public statement on Brexit, when he stressed the interests of the rest of the EU were his top priority.
The European parliament must give its consent to the final Brexit deal and Barnier, who briefly served as an MEP, promised to involve them throughout the process.
In a sign of ambivalence about a transition deal, he told MEPs it was not part of the remit of the EU exit talks and they were waiting to see what the UK would ask for. This is consistent with earlier remarks, when he said it was “difficult to imagine” a transition deal because the UK did not know where it was heading after Brexit.
He made clear that the UK would have to follow EU law if it wished to remain a member of the single market during the transition period. This reinforces comments by Malta’s prime minister, Joseph Muscat, who said this week that the European court of justice would be “dishing out judgements” to the UK during any transition period.
Some MEPs’ mistrust of the UK comes through in the minutes of Barnier’s meeting with the MEPs who chair the European parliament’s main committees, including foreign affairs, trade, single market and budget.
Elmar Brok, the German centre-right chair of the foreign affairs committee, reportedly voiced concern the UK would become “a Trojan horse of the US” – echoing fears that date back to the time of Charles de Gaulle.
Werner Langen, a German centre-right MEP who is leading the investigation into the Panama Papers, wants to ensure the UK accepts international rules to clamp down on tax avoidance. Some EU politicians are worried the UK will embark on “a race to the bottom”, by slashing corporate taxes, to compensate for Brexit.
Barnier, however, said he expected the UK to stick to existing commitments to enact more than three dozen laws to combat money laundering and tax avoidance.
By John Detrixhe and Silla Brush
11 January 2017
Mario Draghi said the European Central Bank should maintain oversight of U.K.’s vital clearing business even after Britain leaves the European Union, touching on an issue that became a battleground after the June referendum.
The supervision of U.K. clearinghouses has been thrown into question since the Brexit vote, with both Germany and France seeking to chip away at London’s dominance in the business. Britain’s exit could lead to a loss of ECB oversight of such institutions, ECB President Draghi said in a letter to lawmaker Pervenche Beres.
“It will be important to find solutions that at least preserve, or ideally enhance, the current level of supervision and oversight,” Draghi said in the letter, dated Jan. 10.
While Draghi didn’t mention it in his letter, the ECB has tried in the past to claw euro-derivatives clearing away from the U.K. Some $2.7 trillion of interest rate swaps change hands each day, and the biggest clearinghouse — which stands between derivatives traders to prevent a default from spiraling out of control — is a London-based unit of London Stock Exchange Group Plc. Intercontinental Exchange Inc. also operates a U.K. clearinghouse.
“The location of clearing houses for euro payment and settlement services after the U.K. leaves the European Union will depend on details of the exit agreement,” said ECB spokesman Rolf Benders.
Dollar interest-rate swaps are also cleared in London, and the U.S. hasn’t restricted that market. Instead, authorities rely on registration to provide some level of oversight, Commodity Futures Trading Commission Chairman Timothy Massad said Tuesday in an interview.
Massad, who has spoken against restrictions on the location of clearing, said that he could still appreciate the EU’s desire to have oversight of clearinghouses in London that are crucial for euro-denominated products and the entire European economy.
Draghi also said the ECB must “carefully” analyze Deutsche Boerse AG’s takeover of LSE, which would create the region’s biggest exchange operator. Deutsche Boerse’s Eurex unit, for example, is licensed as a bank.
“When a merger leads to a change in ownership of a euro-area bank, as could be the case for entities within Deutsche Boerse and LSE Group that are licensed as banks, the ECB has to analyze it carefully from a prudential perspective,” Draghi said.
The EU’s executive arm, the European Commission, is already weighing whether the LSE-Deutsche Boerse tie-up would damage competition. Beres, a French member of the European Parliament, in November said it needs to go further. The deal should be considered by the full commission, not just its competition arm, she said.
A Deutsche Boerse spokeswoman said the firm is in constructive dialogue with the commission.
General Brexit news:
Sky News
By Mark Kleinman
9 January 2017
Continued access to Europe’s single market after the UK leaves the European Union (EU) must be preserved under a priority deal for the financial services sector, according to a report commissioned by scores of leading City firms.
Sky News has obtained the final draft of a report by the International Regulatory Strategy Group (IRSG) – a financial and professional services industry body – which warns that a departure from the EU’s passporting regime would be fraught with risk for London’s status as a global financial centre.
The report would appear to put the City at odds with Theresa May, the Prime Minister, who told Sky News’ Sophy Ridge on Sunday that Britain would not be able to pick elements of single market membership which suited it.
“Often people talk in terms as if we are leaving the EU but we still want to keep bits of membership of the EU,” she said.
“We’re leaving, we’re coming out.”
Titled ‘The EU’s third country regimes and alternatives to passporting’, the 172-page document produced by law firm Hogan Lovells and TheCityUK lobbying group, contains detailed analysis of the options available to the City once the Brexit process is concluded.
It argues that avoiding the imposition of new barriers between the UK and EU is essential.
“Failure to do so would reduce stability, and hinder markets in their role of channelling savings into investment and of creating jobs and growth,” according to the draft document.
It warns that the City would be hamstrung by a lack of definition of ‘equivalence’, which would enable firms to trade across EU borders roughly as they do now.
It also flags “serious concerns regarding the processes around [Third Country Regimes]”, including their unpredictability, the absence of a right to appeal against a determination of non-equivalence, and the ability of the EU to vary or withdraw such designations “at little or no notice”.
Sources said the report’s significance would partly reside in the fact that the IRSG is chaired by Mark Hoban, the former Treasury minister, with executive board members including executives from Allianz Global Investors, Aviva, Citi,  Deloitte, Fidelity, JP Morgan, the London Stock Exchange, Prudential and Standard Chartered.
Among the alternatives for UK-based firms wishing to conduct regulated activities in EU member states where neither passporting nor TCR arrangements were available, the report outlines three options: considering “whether national laws permitted it to carry on such business without a licence…[although] there are no general exemptions across the EU”.
They could also establish an EU-based subsidiary and apply for it to be authorised by the local regulator, although this method of operation if “generally considered to be inefficient”.
The last option is for a UK firm to apply to local regulators for authorisation in that member state through a branch rather than a subsidiary, but this too is “not a universal solution”.
The IRSG report concludes that third country regimes “do not provide a long-term, sustainable solution for the UK-based industry as a whole to access EU markets”.
It also urges ministers to conclude transition arrangements with the EU “as quickly as possible in order to maintain maintaining continuity of service provision by UK and EU firms until a negotiated settlement can be implemented”.
The document is likely to provoke a stark reaction both in Whitehall and the boardrooms of major City employers which are urgently seeking guidance about the shape of a future trading relationship between the UK and EU.
Dozens of firms, including Citi, HSBC, JP Morgan and M&G Investments, have raised the prospect that thousands of jobs will either move to other EU jurisdictions or be axed altogether without a guarantee of service continuity for clients.
The IRSG’s conclusions are the latest in a string of documents produced by key City stakeholders since the Brexit vote, with organisations such as the British Bankers’ Association and TheCityUK, two lobbying groups, highlighting potential risks to the financial and professional services sectors from limits on migration and significant trading restrictions.
Barney Reynolds, a partner at the law firm Shearman & Sterling, has argued the opposite case, suggesting that adopting an ‘enhanced equivalence’ model would liberate the City and enable it “to move to better, more targeted regulation”.
Sources said the IRSG report was due to be discussed with regulators and Whitehall officials later this week.
Financial Times
By Stanislas Yassukovich
11 January 2017

There is confusion over the fate of the UK service economy after Brexit, particularly where the City of London is concerned. Misunderstandings threaten a proper discussion and, worse still, run the risk of wasting diplomatic capital in the Brexit negotiations.

Commentators and even Treasury officials keep repeating the mantra that “the City must have access to the single market”. But there is effectively no single market in services in the EU, and certainly not in financial services. For example, a qualified German hairdresser must requalify to practice in France (and there are two different qualifications, domicile and shop), and an English solicitor cannot provide conveyance for a residential property sale in most EU countries.
As there is no banking union, no unified capital market and no European stock exchange, the regulation of financial services, focused largely on investor protection, is at national not EU level. Every industrialised nation, including the US, has investor protection legislation which requires overseas providers to undergo some form of registration and authorisation. And these requirements are exempted from the restrictions on non-tariff barriers in the General Agreement on Trade in Services.
The concept of “passporting” was designed to allow a financial institution authorised in one EU member state to apply for passports to market financial products in other member states without the need of further authorisation. It is open to firms in non-member states to establish a presence in one EU state and apply for passports from there. Luxembourg tends to be the location of choice for obvious tax reasons. After Brexit, UK firms, which have shown little interest in penetrating retail markets on the continent, will remain free to set up subsidiaries in the EU to acquire relevant passports.
In the absence of a single market, strongly resisted by EU members highly protective of their own regulatory regimes (including the UK), an attempt was made to introduce a single standard for retail products, resulting in the Markets in Financial Instruments Directive, roundly ignored by France and other EU countries, but strictly observed by the UK. It was hoped the passport system would introduce competition within the EU. But this has not happened and the core retail financial activities — residential mortgages, deposit and savings products and so on — remain almost entirely national, and highly protected.
So the concern about “access” must refer to the City’s wholesale business, by far the most important component of its position as the world’s premier financial centre. But wholesale financial services are purchased at source by professional clients, even those who do not maintain a presence themselves in the City, as so many do. EU institutions also buy wholesale services in the other financial centres of the world, such as New York, Dubai, Hong Kong and Tokyo.
There is no passport requirement to have orders executed on the City’s exchanges, any more than for orders on those in New York, Chicago or Tokyo. The world’s banks do not need a passport to access London’s interbank market, which is global, or to buy or sell foreign currency, or to participate in capital market syndicates. Nor do companies need one to buy reinsurance at Lloyd’s, engage corporate finance and M&A advisers or procure a host of other City services delivered at source.
So now a new threat is perceived by Brexit sceptics: that the EU may deny its institutions access to the City. Although, the EU cuts itself off from the world in many ways, it has yet to ban its citizens from contracting services outside its borders. Its institutions have been buying financial services freely from New York, Chicago, Dubai, Hong Kong, Tokyo and elsewhere. The EU and the eurozone are not likely to introduce discriminatory exchange controls, cutting themselves off from the financial world.
The controversy over the settlement and clearing of euro-denominated instruments has been around for some time. But in order to enforce a move of this facility to the eurozone, restrictions would have to be placed on eurozone banks in dealings with non-eurozone counterparties, eroding the currency’s convertibility. In any case the trading would stay in London, because that is where the liquidity and supporting services are located. It must be remembered than when Eurobond trading concentrated in London in the early 1960s, clearing was through Euroclear in Brussels and Cedel in Luxembourg.
Access to the EU single market in financial services is not an issue — simply because, effectively, there isn’t one. As it did when the UK did not adopt the euro, the City should just get on with business as usual.
By Ben Martin
12 January 2017
The City has ratcheted up the pressure on the Government by issuing a series of demands that banks and other financial firms want from a Brexit deal with Brussels, including a transition period to stop markets from falling into a tailspin.
An influential lobby group chaired by veteran banker John McFarlane, the chairman of Barclays, has published a list of what it calls “key priorities” for ministers to consider in looming negotiations with the EU over the UK’s future relationship with Europe.
The list from TheCityUK includes calls to “maximise access to EU markets”, a two-stage transition arrangement, and a plea to allow the clearing of euro-denominated derivatives – a £470bn-a-day industry- to stay in the UK.
“There is no question that getting Brexit right is a once-in-a-generation challenge,” said Miles Celic, TheCityUK’s chief executive. “Ultimately, the best Brexit deal will be one that reduces uncertainty and enables businesses to continue to best serve customers and clients.”
Under Article 50 of the Treaty of Lisbon, which Prime Minister Theresa May plans to trigger by the end of March, London has just two years to thrash out a deal with Brussels.
Banks, asset managers, and insurers are concerned that once the two years is up, firms and markets will fall off a “cliff edge” because either financial regulations will have abruptly changed or the new rules will have not been decided.
To avert the potential chaos, the CityUK wants an agreement on a staged transition to be struck at the start of Article 50. This would involve an initial “bridging period” spanning the UK’s exit to the ratification of the country’s deal with the EU, and then an “adaption period” that would allow companies to adjust to the new rules.
There are fears London’s status as a global financial hub will be damaged by the UK’s secession from Europe, especially in the event of a so-called “hard Brexit” that would result in the country leaving the EU’s single market.
Some international banks that have based their European operations in London are already considering shifting thousands of jobs to Paris, Dublin, Frankfurt and elsewhere in the EU to preserve their access to the single market.
But TheCityUK said that companies should “have access to the widest possible range of financial and related professional products and services without the need to establish a commercial presence” in both Britain and the EU. It is also pushing for rules that would not restrict UK-based firms from continuing to hire talented EU nationals.
The Government has so far been tight-lipped about the type of deal it will seek and the uncertainty has caused considerable unease in the Square Mile and Canary Wharf.
Earlier this week, Douglas Flint, the chairman of HSBC, and Xavier Rolet, the chief executive of the London Stock Exchange, warned MPs on the Commons Treasury Select Committee that some firms will start to implement Brexit contingency plans as soon as Article 50 is activated, if the Government has not given companies any guidance on what it plans to negotiate with Brussels.
Mr Rolet estimated that as many as 232,000 British jobs could be at risk if the clearing industry is lost to Europe or New York, much higher than the tens of thousands of job losses that many thought Brexit might entail. HSBC itself has previously warned it could shift 1,000 roles to Paris.
By Joe Watts
9 January 2017
Theresa May has blamed the media for misrepresenting her words on Brexit leading to a slump in the pound.
Sterling dropped more than one per cent against the dollar and euro following stories that the Prime Minister is planning a hard Brexit which tears the UK out of the EU’s single market.
Asked whether the money markets were “getting it wrong” in reacting negatively to her approach, she said: “I am tempted to say that the people who are getting it wrong are those who print things saying I’m talking about a hard Brexit, [or] it is absolutely inevitable it is a hard Brexit.
“I don’t accept the terms soft and hard Brexit.”
She added: “What we are doing is going to get an ambitious, good and best possible deal for the United Kingdom in terms of trading with and operating within the European single market.”
The outburst came after an interview with Sky News in which she repeated equivocal comments about her approach to Brexit, border controls and the single market.
Asked in the interview if she would prioritise immigration controls over single-market access, Ms May said: “We are leaving, we are coming out, we are not going to be a member of the EU any longer.
“We will have control of our borders, control of our laws, but we still want the best possible deal for UK companies to trade with and operate within the European Union and also European companies to trade with and operate within the UK.”
She then repeated similar comments she had made in December that people should not “think about this as somehow we’re coming out of membership but we want to keep bits of membership”.
Her words led some papers to report stories under headlines like “Goodbye to the Single Market” after which the pound dropped to $1.214 and to €1.153.
Asked later whether Ms May’s answers were not clear enough, a Downing Street spokesman later said: “This is going to be a complex negotiation and the Prime Minister is perfectly within her rights to approach these issues in the best way to get the best outcome for the UK.”
Ms May has refused to give much real detail of her negotiating position, since telling Tory conference last year that she would in March trigger Article 50 of the Lisbon Treaty, launching official Brexit talks.
Despite being under pressure to say more, she claims any sort of “running commentary” would undermine the UK’s position in negotiations.
She had originally wanted to invoke Article 50 under Royal Prerogative powers, but it looks likely she will be forced to give Parliament a chance to vote on triggering after losing a High Court challenge over the matter.
Ms May has promised to give a speech this month setting out more detail of her approach to Brexit.
13 January 2017
A “muddled” Brexit would cost London heavily in terms of jobs and investment, Sadiq Khan has warned.
The Mayor of London accused the government of having no clear strategy just two months ahead of a deadline to formally trigger the UK’s exit from the European Union (EU).
Mr Khan said a “muddled Brexit” would be as damaging as a “hard Brexit”.
The Department for Exiting the European Union has yet to respond to the mayor’s speech.
In his speech to business and political leaders on Thursday, night the Mr Khan said: “It’s deeply concerning that we still appear to have muddled thinking at the heart of government.
“The only thing that would be as damaging as a hard Brexit would be a muddled Brexit.
“And – unfortunately – it looks like that is where we are heading unless there’s a change in tact and direction from our government.”
The Mayor said a negative Brexit impact for London would hit the whole country.
“If the proper agreements aren’t negotiated and we don’t get the necessary transitional agreements in place, there’ll be serious knock-on impacts on our future – with jobs and billions of revenue lost,” he said.
“Revenues used to deliver public services and much, much more.
“This would hit the entire country, not just London.”
Downing Street has previously said the prime minister will give a speech next week “setting out more” on the government’s Brexit plans.
Theresa May’s official spokeswoman said: “She will be making a speech on Tuesday, setting out more on our approach to Brexit, as part of preparing for the negotiations and in line with our approach for global Britain and continuing to be an outward-looking nation.”
The Guardian
By Anushka Asthana and Heather Stewart
11 January 2017
Cabinet ministers have privately conceded that they are very likely to lose a landmark legal case on Brexit in the supreme court and have drawn up at least two versions of a bill that could be tabled after the ruling.
Sources have told the Guardian that senior government figures are convinced seven of the 11 judges will uphold the high court’s demand that Theresa May secure the consent of MPs and peers before triggering article 50.
It is understood that more than one possible bill has been prepared so that the ministers are ready to respond to any detailed guidance from the judges into what the legislation should look like.
It is not yet clear when the decision is likely, but the Guardian has been told that the government has asked the supreme court for early sight of the judgment, to allow “contingency planning”.
However, a spokesperson for the supreme court made clear on Wednesday that would not happen, saying: “It’s just too sensitive”.
Ministers hope the court will allow May to put together a short, three-line bill, or even just a motion, which is narrowly focused on article 50 itself and difficult for parliamentarians to amend.
However, Lady Hale – deputy president of the court – gave a lecture in November suggesting it was possible for the judges to go much further and demand a “comprehensive replacement” of the 1972 European Communities Act.
Dominic Raab, a Conservative MP and former minister who campaigned for Brexit, told the Guardian he and colleagues were not too worried about the case. “I hope we get some common sense from the supreme court, but I don’t expect the ruling to hold up triggering article 50, and the vast majority of people whichever way they voted now want us to get on and deliver Brexit,” he said.
However, some remain-supporting MPs and peers are hoping there will be an opportunity to amend legislation, for example to demand that the prime minister pursue the closest possible economic relationship with the EU.
The Liberal Democrats plan to lay down amendments demanding a Brexit deal be put to the public in a second referendum and that 16- and 17-year-olds get a vote.
Some pro-Brexit MPs have been urging the prime minister to adopt a “keep it simple strategy” – a phrase borrowed from management theory – ensuring any bill is as brief as possible, to minimise the risk it could be derailed.
Mark Harper, the former Tory chief whip who backed remain in the referendum, said he believed the supreme court would only be able to demand that the government either produce a motion or a bill, but not demand any level of detail beyond that. He suggested May’s government would probably try to publish “something very tight that gives authority to ministers to trigger article 50 before the end of March”.
Harper said that while it was not possible to avoid any amendments at all, a short and focused bill would make it difficult for MPs to cause trouble for May by constraining her room for manoeuvre during Brexit negotiations. He said that if he was still chief whip he would not be complacent about the process, but was “cautiously optimistic” that the legislation would be passed.
Any attempt by the government or the claimants to obtain advance notice of the supreme court decision has been stymied. In most cases it is normal practice for the lawyers involved to be sent the judgment on an embargoed basis beforehand.
In cases as sensitive as the article 50 appeal, the judgment is kept secret until the last moment to ensure that it does not leak out. A supreme court spokesperson said: “In view of the potential sensitivity of the case, there will be no copies of drafts available to anybody before the day of hand-down”.
Ministers are planning to move quickly after a judgment to avoid the days of speculation and anger that followed the high court ruling, which took the government by surprise. The first step is likely to be a statement to the House of Commons by the Brexit secretary, David Davis.
He is proving popular among MPs since taking up his role, with friends in the Conservative party planning a drinks reception this month to belatedly welcome him back to the frontbench. His ally Andrew Mitchell has joked that it is time for a celebration now it is clear that Davis, who stepped down as an MP in 2008, is not going to resign from this role.
One rumour circulating in Westminster is that the government plans to publish a press release claiming a win of sorts if four judges rule in favour of the government, while seven are against. That is the outcome that ministers believe is most likely.
And while they think they are likely to lose the case being brought by Gina Miller, which would require them to publish an act of parliament, they are more confident about other aspects. In particular, they do not think it is likely that the judges will order May to seek agreement from the Scottish and Welsh devolved administrations before starting the Brexit process.
The prime minister will give a speech setting out her approach later this month, and she will later publish a plan for Brexit after signing up to a motion put forward by the Labour party.
Moderate Conservative MPs had urged the government to table a formal white paper, setting out its priorities as it negotiates Brexit, including the answer to key questions such as whether May hopes to keep Britain in the single market or the customs union.
But they now expect May to publish a less definitive “menu of options” amid fears that a detailed white paper could constrain her room for manoeuvre in the coming months. “The government is still very concerned that if it puts forward a white paper, it will be subject to amendment,” said one backbencher.
Separately, the Scottish National party (SNP) is seeking to use the political crisis in Northern Ireland to ramp up the pressure on the government over its decision to table article 50 by the end of March. Northern Ireland, like Scotland, voted to remain in the EU, and the government has promised to take formal account of opinion in other parts of the UK through regular meetings of a joint ministerial committee as it enters talks.
Deirdre Brock, the SNP’s spokeswoman on Northern Ireland, challenged James Brokenshire on Monday. She asked the secretary of state for Northern Ireland: “Now that there is no effective administration at Stormont who can speak up for Northern Ireland in the joint ministerial committee, and remembering that Northern Ireland voted to remain, can he tell us what he is doing to ensure that the interests of the people of Northern Ireland are being looked after when Brexit negotiations are considered?”
15 January 2016
The UK may be forced to change its “economic model” if it is locked out of the single market after Brexit, Chancellor Philip Hammond has said.
Mr Hammond said the government would not “lie down” and would “do whatever we have to do” to remain competitive.
He had been asked by a German newspaper if the UK could become a “tax haven” by further lowering corporation tax.
Labour’s Jeremy Corbyn said his comments sounded like “a recipe for some kind of trade war with Europe”.
Having so far refused to offer a “running commentary” on her plans, Prime Minister Theresa May is expected to spell out the most detail so far of her Brexit strategy in a speech on Tuesday.
Reports have suggested she will signal pulling out of the EU single market and customs union, although Downing Street described this as “speculation”.
In an interview with the German newspaper Welt am Sonntag newspaper, Mr Hammond said he was “optimistic” a reciprocal deal on market access could be struck, and that he hoped the UK would “remain in the mainstream of European economic and social thinking”.
“But if we are forced to be something different, then we will have to become something different,” he said.
“If we have no access to the European market, if we are closed off, if Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short-term.
“In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do.
“The British people are not going to lie down and say, too bad, we’ve been wounded. We will change our model, and we will come back, and we will be competitively engaged.”
‘Extremely risky’
Asked about Mr Hammond’s comments during an interview on The Andrew Marr Show Mr Corbyn said “He appears to be making a sort of threat to EU community saying ‘well, if you don’t give us exactly what we want, we are going to become this sort of strange entity on shore of Europe where there’ll be very low levels of corporate taxation, and designed to undermine the effectiveness or otherwise of industry across Europe.’
“It seems to me a recipe for some kind of trade war with Europe in the future. That really isn’t a very sensible way forward.”
Mr Corbyn also said Mrs May “appears to be heading us in the direction of a sort of bargain basement economy”, adding: “It seems to me an extremely risky strategy.”
Scottish First Minister Nicola Sturgeon said it appeared Brexit would mean a “low-tax, deregulated race to the bottom”, with workers’ rights and environmental protections threatened.
She wrote on Twitter: “If that is the case, it raises a more fundamental question – not just are we in/out EU, but what kind of country do we want to be?”
In her speech on Tuesday, the prime minister is expected to call on the country to “put an end to the division” created by the EU referendum result.
She will urge the UK to leave behind words such as “Leaver and Remainer and all the accompanying insults and unite to make a success of Brexit and build a truly global Britain”.
Several of Sunday’s newspapers claim Mrs May will outline a “hard Brexit” approach, a term used to imply prioritising migration controls over single market access.
Northern Ireland Secretary James Brokenshire said he did not think it was a “binary choice” between trade and migration, but added that the “very stark message” from the EU referendum was that “free movement as it exists today cannot continue in to the future”.
Speaking on the BBC’s Sunday Politics, Liberal Democrat leader Tim Farron said a “hard Brexit” had not been on the ballot paper in June’s referendum and accused the PM of adopting “the Nigel Farage vision” of Brexit.
Mr Farage, the former UKIP leader, told Sky News he had “yet to be convinced” by the PM’s approach.
The Guardian
By Anushka Asthana
10 January 2017
Jeremy Corbyn will use his first speech of 2017 to claim that Britain can be better off outside the EU and insist that the Labour party has no principled objection to ending the free movement of European workers in the UK.
Setting out his party’s pitch on Brexit in the year that Theresa May will trigger article 50, the Labour leader will also reach for the language of leave campaigners by promising to deliver on a pledge to spend millions of pounds extra on the NHS every week.
He will say Labour’s priority in EU negotiations will remain full access to the European single market, but that his party wants “managed migration” and to repatriate powers from Brussels that would allow governments to intervene in struggling industries such as steel. Sources suggested that the economic demands were about tariff-free access to the single market, rather than membership that they argued did not exist.
Corbyn’s speech and planned media appearances represent the first example of a new anti-establishment drive designed by strategists to emphasise and spread his image as a leftwing populist to a new set of voters. They hope the revamp will help overturn poor poll ratings across the country, particularly with a looming byelection in Copeland, Cumbria.
Speaking in Peterborough, chosen because it is a marginal Tory seat that voted heavily in favour of Brexit, and which Labour is targeting, Corbyn will lay into May’s failure to reveal any Brexit planning, and say that Labour will not give the government a free pass in the negotiations.
After comparing the prime minister’s refusal to offer MPs a vote on the final Brexit deal to the behaviour of Henry VIII in a Guardian interview, Corbyn will say: “Not since the second world war has Britain’s ruling elite so recklessly put the country in such an exposed position without a plan.”
In a town that has experienced high rates of change in terms of migration, he will use his strongest language yet on the subject.
“Labour is not wedded to freedom of movement for EU citizens as a point of principle. But nor can we afford to lose full access to the European single market on which so many British businesses and jobs depend. Changes to the way migration rules operate from the EU will be part of the negotiations,” he will say.
“Labour supports fair rules and reasonably managed migration as part of the post-Brexit relationship with the EU.”
Corbyn will also say, however, that there will be no “false promises on immigration” and that his party will not echo the Conservatives by promising to bring the numbers down to the tens of thousands.
Instead, he will repeat an argument that action against the undercutting of pay and conditions, closing down labour loopholes and banning jobs being exclusively advertised abroad could bring down the amount of people travelling to the UK.
“That would have the effect of reducing numbers of EU migrant workers in the most deregulated sectors, regardless of the final Brexit deal,” he will say.
The speech comes as tensions grow within the Labour party as a number of high profile MPs, including the deputy leader, Tom Watson, and home affairs committee chair, Yvette Cooper, suggest that the party has to change its position on free movement.
This weekend two MPs – Emma Reynolds and Stephen Kinnock – suggested the time had come for a two-tier system under which highly skilled workers such as doctors could travel to Britain for confirmed jobs, while there would be quotas for lower-skilled workers. They argued that the EU referendum “was a vote for change on immigration”, an argument that May has also made.
Reynolds, who is a member of the select committee on leaving the EU, said she welcomed Corbyn’s commitment to managed migration but that the party had to understand what that meant.
Corbyn has been criticised from within the party for failing to talk about free movement reform, often stressing the positive impact of migration instead. Some MPs fear the position could cost the party votes across the north of England and the midlands where voters have been deserting Labour over the past decade.
Corbyn will also use his speech to try to contrast Labour and the Conservatives over the NHS after the British Red Cross said the health service was facing a humanitarian crisis.
“The Tory Brexiteers and their Ukip allies promised that Brexit would guarantee funding for the NHS to the tune of £350m a week. The pledge has already been ditched,” he will say, promising to end underfunding and privatisation.
“The British people voted to refinance the NHS, and we will deliver it.,” he will say. Sources would not say whether that would necessarily amount to a commitment of £350m a week.
As politicians and academics grapple to explain June’s Brexit vote, the party leader will provide his interpretation, arguing that it was about regaining control over the economy, democracy and people’s lives.
“We will push to maintain full access to the European single market to protect living standards and jobs,” he will say. “But we will also press to repatriate powers from Brussels for the British government to develop a genuine industrial strategy essential for the economy of the future.”
Corbyn has objected to EU state aid rules that prevent governments from intervening in industries such as steel. He also wants to make arguments about taking back control of the jobs market with collective bargaining agreements in key sectors and ending “the unscrupulous use of agency labour and bogus self-employment”.
By Siobhan Fenton
14 January 2017
Theresa May’s plans to trigger Article 50 could be delayed by months because enacting Brexit while Northern Ireland’s Assembly is in crisis may be illegal, The Independent has learned.
Power-sharing collapsed in the region earlier this week, meaning a snap election for Stormont is imminent.
An election is expected to last for at least two months, during which time the Northern Ireland Assembly will be unable to sit and approve decisions.
As a result, the Prime Minister may be unable to trigger Article 50 – the formal mechanism by which a country begins to leave the European Union – as she will be unable to get approval from Stormont, thereby delaying her Brexit plans even further.
Speaking to The Independent, leader of the anti-sectarianism Alliance Party, Naomi Long, said Ms May could face a legal challenge from Northern Irish politicians if she tries to trigger Article 50 while Stormont is not sitting.
She said: “Given the timing of this, what we’re going to have is an election taking place and talks [to form a new government at Stormont] taking place when any decision would need to be made by the Assembly [on Brexit].
“There won’t actually be an Assembly there to actually take votes. And that is one of the biggest challenges that we have in terms of the timing.
“I think unfortunately because the Assembly isn’t likely to be in place, to be able to take votes on the issue, we are in a very vulnerable and very weak position. Whether that means that Article 50 would have to be delayed, may at the end of the day be another case for the court to find out whether the absence of an administration here means that they need to consult with the devolved administration goes.”
Ms Long added that in the event of such a legal challenge, Article 50 could be delayed considerably while a court decides whether Stormont must approve plans.
“It could take months. We just don’t know, is the truth. As with so much around Brexit, it’s an uncertainty,” she said.
The Supreme Court is currently deciding whether the devolved administrations in Scotland, Wales and Northern Ireland should also be entitled to approve Ms May’s plans to trigger Article 50.
During the legal challenge which was heard in December, Northern Irish lawyers argued that in addition to MPs at Westminster getting a vote on whether to approve the plans, Northern Irish politicians at Stormont should also get to approve or deny the move. The justice are currently considering the case and their verdict is expected within the next week.
Power-sharing at Stormont collapsed on Monday after Sinn Fein politician Martin McGuinness resigned to protest at how his Democratic Unionist counterpart Arlene Foster handled allegations of a financial scandal.
Known locally as the “cash for ash scandal”, Ms Foster is accused of mishandling a government scheme started in 2012. The programme was designed to encourage local businesses to use renewable heat sources but a loophole meant they were actually paid to burn fuel pointlessly.
It is estimated the scheme will cost the tax payer some £490m. Ms Foster has denied any wrongdoing and resisted calls to stand down.
On Monday, Mr McGuinness resigned as Deputy First Minister, meaning Ms Foster also lost her position as First Minister under power-sharing rules which mean both must be in office for either of them to remain in power.
Secretary of State for Northern Ireland James Brokenshire now has until 5pm on Monday 16 January to convince Sinn Fein to nominate a replacement for Mr McGuinness in order to save the Executive. However, Sinn Fein has insisted they will not do so and an election now appears unavoidable.
An election is expected to be held within the next eight weeks, which would clash with Ms May’s plans to trigger Article 50 by the end of March. The possibility of a legal challenge by Northern Irish politicians to triggering the mechanism will be a further blow to the Prime Minister’s Brexit plans, amid criticisms that her Government’s attempts to enact EU withdrawal have been poorly executed.

Select Milano Monitor 08/01/2017

The Italian job: Milan hoping to clear up after Brexit

Financial News

By Lucy McNulty

6 January 2017

A group of Italian regulatory experts and entrepreneurs is promoting Milan as a eurozone hub for financial services, as it looks to step into the void created by the UK’s departure from the EU.
Select Milano, an independent, non-government organisation, is looking to pick up business that London could lose for regulatory reasons after Brexit. In its sights is the City’s lucrative clearing business, which processes around $570 billion of euro-denominated derivatives transactions daily.
Frankfurt and Paris will also be keen to compete for any business that could be up for grabs. Milan, Italy’s economic capital, is mounting a charm offensive, touting its established ties to the City – such as the London Stock Exchange Group’s ownership of the Milan stock exchange, Borsa Italiana.
Select Milano has been trying to build “a permanent bridge” between London and Milan since 2013, when then-British Prime Minister David Cameron promised to hold a referendum on the UK’s membership of the EU.
Bepi Pezzulli, a lawyer, is chairman of Select Milano. He previously managed treasury operations at the European Bank for Reconstruction and Development, and was formerly head of legal and compliance for investment manager BlackRock in Italy, Cyprus and Greece.
Pezzulli met with FN in London in December to discuss the group’s plans.
Financial News: Why did you launch this initiative?
Pezzulli: We set up Select Milano in 2013, when the [UK] prime minister announced he was calling a referendum.
We thought that once Brexit hits there [would] be an operation to steal business from the City, and Paris and Frankfurt would [lead that]. But breaking the economic unity of a City cluster isn’t good.
Rather than breaking the City cluster, we thought we should expand its perimeter to include Milan. [My] mission in life is to anglicise Milan. I think Italy has got an untapped potential in developing a better financial services industry, [and that] can help the country go back to its former glory.
So how do you plan to anglicise Milan? 
Our market infrastructure is already owned by the London Stock Exchange Group. But we’re also working to ensure Milan’s non-domiciled regime is equivalent to that in effect in Britain, so if you’re ultra-high net worth individuals you can ‘opt in’ a flat tax of €100,000 for 15 years.
We have approached the European Court of Arbitration to allow disputes to be governed by English law.
There’s a 50% tax break, too, that was approved in Italy’s 2017 financial services bill on December 7, so multinational executives from top banks relocating to Milan will get 50% of their salary tax free for five years. [After five years, the top tax rate is 43.6%.] The Tobin [or financial transaction] tax will lapse on the 31st December, 2016. And we’re working on reforming the capital gains tax to align it with England. [We’re looking to replicate] a small square mile right in the eurozone.
Who do you hope will benefit?
We’re trying to offer solutions to the City of London rather than to individual financial institutions. [We’re] targeting the clearing market because, with Brexit, this market will flow back into the eurozone. That’s going to be expensive and complex. But I think no more than 11,000 jobs will be lost as a result.
We think some of those jobs could transfer [to Milan], while some jobs will be just created locally.
On December 4, Italy voted to reject constitutional reform as part of a referendum proposed by its then-Prime Minister, Matteo Renzi. How will this affect institutions’ willingness to buy-in to Select Milano? Mature democracies come with constitutional steps. The same applies to England. It’s democracy. Markets know how to deal with it.
I’m [also] not sure how the constitutional referendum is relevant to the financial stability. So far, no Italian bank has gone bankrupt. There’s a bit of drama surrounding [Banca Monte dei Paschi di Siena], but it doesn’t really impose a threat to financial stability. I would be way more worried about the financial health of the German banks, nowadays… [By comparison,] Italy is in business.
What are the next steps?
Clearly, Brexit is a wake-up call and reforms are needed. I also don’t think that Brexit is going to be the catastrophe [for the UK] that many pundits foresee, because it may be also an opportunity for very pragmatic economic policies. We are competing against Paris and Frankfurt.
Paris has got a very high tax rate and its labour legislation is a nightmare. Frankfurt doesn’t really have an infrastructure, no international schools, no universities, no housing stock. [It is also] a real threat to the dominance of the City of London. Milan doesn’t threaten the City of London. It’s the second-largest industrial [city] in Europe, already clears €10 billion daily, has six universities, housing stock, industrial tissue, research and development, so the whole ecosystem is there.
The new government is business-friendly, is being well received by the markets [and] … the government backing of Milan’s global ambition continues, and [this initiative] is fully funded with €1.5 billion. If conditions allow, we’ll do a roadshow in L