By Mariarosa Marchesano
13 March 2017
Summary from Italian:
· Milan’s dossier for its candidacy as host of the European Medicines Agency will be presented in mid-March to the board based in London; the board will choose between at least 4-5 cities by June.
· In the context of Milan’s aim to become a financial capital in Europe, its objectives seem more concrete with the potential dissolution of the merger of the LSE Group and Deutsche Boerse; it does, however, face stiff competition from cities like Paris, Frankfurt, Brussels, Amsterdam, Vienna and Warsaw.
· The author discusses the groundwork laid by Select Milano in propelling Milan’s goals of becoming a financial capital, and notes that the group was able to gain the ear of various politicians across different areas of the government.
· Alessandro Pagano, member of the Chamber Finance Committee, estimated that around 11,000 Italians could return from London to Italy if favourable conditions, financially and logistically, are offered. He said that they key is to act united to achieve the vision for Milan due to competition in France and Germany.
· Given concerns surrounding the slowness of the Italian justice system, the EEIG structure proposed by the Parliament would have an internal justice function that replicates Anglo-Saxon law.
By Bepi Pezzulli
11 March 2017
Summary from Italian:
· The European Centre for Medium-range Weather Forecasts (ECMWF) has decided to relocate its supercomputing facilities from Reading (UK) to Bologna (Italy) from 2020.
· The Emilia-Romagna region, of which Bologna is the capital, has committed to investing €50 million in infrastructure to convert an old tobacco factory into the ECMWF’s new home.
· This news is a great success for Italy in the area of supercomputing and high technology, and confirms the effectiveness of the post-Brexit strategy launched by the government, based on the input of the Finance Committee and the support of Select Milano as part of its advocacy for a public-private approach towards the post-Brexit strategy.
· Half of the ECMWF’s budget (€100 million) is funded by direct contributions from member states, with the other half coming from the EU which utilises this agency to perform atmospheric monitoring and climate change analysis. This programme could help boost university science programmes in the region and encourage greater knowledge transfer to benefit economic growth.
DATE AND TIME
Wed, March 29, 2017
10:00 AM – 1:00 PM CEST
John Cabot University – Guarini Campus. Aula Magna
233 Via della Lungara
Professional development event for the Legal and Financial Community
Presentation in English followed by networking aperitif
Bepi Pezzulli: Chairman & General Counsel at Select Milano
An alumnus of the venerable “Nunziatella” Military Academy, Bepi Pezzulli read law at LUISS in Rome, earned an LLM from New York University School of Law, and a JD from Columbia University School of Law, where he was appointed a Harlan Fiske Stone Scholar. After working at law practice Sullivan & Cromwell in New York, Pezzulli joined the European Bank of Reconstruction and Development (EBRD) in London, as legal counsel to the bank’s treasury desk; and then global investment manager BlackRock, as legal director.
Bepi Pezzulli’s legal career has been focused on financial markets and asset management. Aside from his international regulatory expertise, he engages in extensive cross-border deal advisory work.
Pezzulli has been credited by LegalCommunity, TopLegal and Legal500 as the model legal risk manager, for being capable of achieving process optimisation and efficiency of service delivery via the application of quantitative management models to the provision of in-house legal services. He is included in the GC Power List 2016 (Italy) and has received the in-house Community Award as General Counsel of the Year 2016.
Pezzulli serves as Chairman and General Counsel of Select Milano. He writes a weekly column (“Dossier Brexit”) in daily financial newspaper Milano Finanza.
Milan and Brexit:
By Eric J Lyman
13 March 2017
Italy unveiled a plan to allow the ultra-wealthy willing to take up residency in the country to pay an annual “flat tax” of 100,000 euros ($105,000) regardless of their level of income.
A former Italian tax official told Bloomberg BNA the initiative is an attempt to entice high-net-worth individuals based in the U.K. to set up residency in Italy as a way to remain in the European Union after the terms of Brexit become effective.
According to the March 8 plan, qualifying individuals from any country are eligible to take advantage of the law, although the impact on the individual’s tax obligation in their home country would depend on that country’s tax laws.
“The idea is that it will help raise revenue through the taxes collected from these individuals as well as from their economic activities: workers they may hire, property sales, and so on,” Francesco Brandi, a former Italian tax official now a professor with Rome’s Sapienza University, told Bloomberg BNA in a March 9 telephone interview.
The rule applies only to individuals who have been a resident in Italy for a maximum of one of the last 10 years, and it expires after 15 years of residency. Individuals paying the flat tax can add family members for an additional 25,000 euros ($26,250) each.
The local media speculated that the measure would attract at least 1,000 high-income individuals, a number which—if accurate—would add an additional 100 million euros ($105 million) to state coffers.
Not a ‘Done Deal.’
But the measure may not be a done deal. According to Carlo Garbarino, a tax law professor at Bocconi University in Milan, the plan is fraught with problems.
“It may be declared unconstitutional because tax laws are required to be equitable,” Garbarino told Bloomberg BNA March 9 in a telephone interview. “If, say, a Russian oligarch with 10 million euros ($10.5 million) in income relocates to Italy, he will basically pay 1 percent in income tax. Is that equitable?”
By Jonathan Freedland
10 March 2017
In the coming days, perhaps as soon as Wednesday, Brexit will turn from abstract to concrete. A near-theological argument that raged in one form or another for nearly three decades will become hard and material, with a fixed deadline. Theresa May is about to trigger article 50, starting the clock on a two-year journey towards the exit from the European Union. And yet those in charge of this fateful, epochal process – and especially those who most loudly demanded it happen – seem utterly unprepared for it.
Philip Hammond’s budget on Wednesday illustrated the point neatly. The country is about to leave its largest export market, a decision with enormous economic implications. The chancellor had the floor for nearly an hour, his obligation to provide an assessment of the present and future prospects of the British economy. Did he so much as mention the imminent exit from the single market? No. Incredibly, he made just two fleeting references to the EU in the entire address.
Instead the stand-out measure, the one that has dominated political discussion since, was Hammond’s decision to take more tax from a core Tory constituency: the self-employed. Important for those individuals, most certainly; a political unforced error, no doubt. But for this to be the focus following a major economic statement on the eve of Brexit is displacement activity of the most heroic kind.
It’s as if the crew of the Titanic eyed the iceberg ahead and promptly decided to have a big squabble over whether to serve white or red.
This failure to wrestle with what’s coming goes wider. The public conversation since 23 June 2016 has barely differed from the debate before that date, each side – leave and remain – still refighting the EU referendum campaign, uncertain how to get out of the old groove.
That failing is most obvious among the Brexiteers, characterised by a refusal to own their victory and take responsibility for it. So when a voice of experience or authority dares point out the possible dangers ahead, they are either sacked, as was the fate of Michael Heseltine, attacked personally, like John Major, or else branded an “enemy of the people” who refuses to bow to the “popular will”.
Those with concerns are accused of “talking down the country” or lacking sufficient faith – as if, should Brexit make us poorer, the fault will belong to those who didn’t screw their eyes tight enough and believe. Credit to Jonn Elledge for calling this what it is: the Tinkerbell delusion.
This surely has to end with the triggering of article 50. From this moment on, the focus must be intensely practical. No more baggy rhetoric about sovereignty and “taking back control”. From now on, those who got us into this situation have to show they can get us out intact by March 2019.
That will require a major shift among the Brexiteer ministers and in Downing Street. Those close to the pre-negotiations between Britain and the remaining 27 EU states report an unwarranted hubris on the UK side that augurs ill. Too many Brexiteers cling to the campaign’s wishful thinking that we go into these talks as the stronger party, that “they need us more than we need them”, and that so long as we hang tough, the Europeans will buckle and hand us a dream deal.
Such arrogance is likely to be exposed soon. For one thing, it ignores the key structural fact that makes Britain’s negotiating prospects bleak from the start: namely, it is imperative for the EU’s own survival that the UK be left in a visibly, materially worse situation after leaving the EU than it enjoyed before. The logic is not vindictive. If the EU is to hold together it must prevent a Brexit contagion. Any divorce settlement must be ugly enough to ensure the remaining 27 stay with their spouse, no matter how loveless that marriage might feel. In four words, the European strategy for the Brexit talks has to be: pour décourager les autres.
But if British politicians are insufficiently mindful of that built-in obstacle, they are far too blithe about the sheer complexity of the undertaking that is about to begin. They are aiming to unpick 40 years of arrangements, seeking to annul them in a pact that will require the blessing of 27 other sovereign states.
To call it 27-dimensional chess understates the geometry: the final divorce settlement will have to be ratified by 38 different national and regional parliaments. To say nothing of the European parliament, commission and council. Each of these bodies has its own interests, pressures and red lines.
May will have to craft a document that satisfies every one of those competing forces, as well as both chambers of the UK parliament. She will have to do it without pushing Scotland towards a second, more winnable independence referendum or recreating a hard border between Northern Ireland and the Irish republic. And she has to get it done in roughly 18 months. Not for nothing did Dominic Cummings, the mastermind of the Vote Leave campaign, tweet with a candour rare among Brexiteers that leaving the EU was the “hardest job since beating Nazis”.
Or reflect on the supposed aces Britain is confidently looking forward to playing in the upcoming game of Brexit poker. Charles Grant, the sage director of the Centre for European Reform who predicted the leave vote, patiently explains how each one of these assets – which Brexiteers believe will make the Europeans putty in our hands – could create as much angst as advantage.
It’s true, says Grant, that the City of London is valued for the financial services it provides to the EU. But it’s also true that Paris, Madrid, Milan, Frankfurt, Dublin and others are circling, ready to feast on the City’s carcass: they want some of that business for themselves.
The Brexiteers reckon the Europeans won’t want to give up London’s special relationship with Washington. But, says Grant, British “fawning” over Donald Trump alienates many Europeans, making them doubt we share their basic values. As for Britain’s contribution to European security – via its UN seat, Nato and its fabled military – that’s much admired. But not if it’s used as a threat: give us a free trade deal or we’ll pull out the 1,000 British troops recently deployed in the Polish-Baltic area. Talk like that will backfire.
Leavers should be approaching this gargantuan task with a special humility, because it was they who needlessly inflicted it upon us.
Remainers need to adjust to the new reality too. Many may be hoping that, as the price and consequences of exit become ever clearer through these talks, some among the 52% will gradually switch sides. But remainers should contemplate the less cheery prospect that the most ardent Brexiteers, and especially the anti-EU newspapers, will double down in their loathing of Brussels. When the EU 27 demand, say, serious cash for single market access, the Mail and Sun will dip their pen into an even deeper well of venom.
So remainers will need to handle these next two years carefully, readying themselves for the day when the deal is done, and ensuring they have already placed two key questions in the front of the public mind: is this deal better than the set-up we had on 22 June 2016? And if it isn’t, why are we doing it?
Europe and Brexit:
By Huw Jones and Andrew MacAskill
7 March 2017
A draft report on the impact of Brexit on Britain’s financial industry warns banks and staff would “leach” away, undermining the wider UK economy, if they do not have access to European Union markets, according to sources who have read the report.
The report has been written by law firm Freshfields Bruckhaus Deringer for TheCityUK, which lobbies on behalf of the financial sector, and may be published later this month, when Britain formally starts divorce talks with the EU.
Firms are already applying a “base case scenario” that when these talks end in two years’ time no access to EU markets will have been agreed, the sources cited the report as saying.
The report adds that even for financial services firms in Britain that do little direct business with the EU, damage from such a “hard” Brexit to the “ecosystem” of financial, legal and accounting services in Britain would hit them too.
Eroding the financial services industry would weaken Britain’s wider “gravitational pull” and hit other parts of the economy too, the report says, according to the sources.
The warning is starker than the public comments from bankers and Bank of England officials, who have said it would be hard for another financial centre in Europe to replicate Britain’s financial ecosystem.
TheCityUK said in a statement it had commissioned Freshfields to produce the report, but it was not yet complete, and it was too early to make assumptions about the conclusions.
Freshfields declined to comment.
Under the most extreme scenario of no deal being reached with the EU, banks based in London without a subsidiary in the EU would be unable to provide sales, underwriting and distribution in the debt and equity capital markets on the continent, the report says, according to the sources.
Banks would also be unable to provide investment advice, portfolio management and lending to EU retail clients, it adds.
Early on in the Brexit negotiations, both sides should agree that Britain can have a phased departure from the trading bloc to give governments and businesses longer to adapt, the report says.
Under the currently envisaged timetable, the report warns, banks will not have enough time to prepare themselves for Brexit and their possible departure.
It also argues Brexit could give Britain an opportunity to “re-frame” regulation – a repeated demand of Brexit backers – the sources said.
There are parts of UK regulation that “could be looked at to facilitate business being conducted in the UK,” the report says.
EU policymakers have already warned Britain not to weaken rules after Brexit to retain banks and attract more international financial business.
The report says firms want EU and UK financial companies to be able to access each other’s markets on the basis that their respective rules are “broadly consistent”.
This echoes failed attempts by the EU and United States around 2006 to hammer out an agreement on “mutual recognition” of regulation, which hit legal complexities.
By Mark Kleinman
7 March 2017
The giant financing arm of Ford is examining whether to shift part of its operations to Germany in a move that would raise fresh questions about the future of the car-maker’s UK workforce.
Sky News has learnt that employees at Ford Credit Europe (FCE), which is based in Warley, Essex, were recently informed that the company had commissioned a project to scrutinise the case for applying for a German banking licence.
The move would be aimed at enabling FCE to continue serving European customers.
Executives are understood to believe that an enhanced operation in a remaining EU member state is likely to be necessary for FCE to conduct its business across Europe if – as expected – the UK loses access to the Continent’s financial services passporting regime.
The UK-based business currently ‘passports’ into 11 European countries, including Austria, Ireland and Italy, and has a full UK banking licence authorised by the Prudential Regulation Authority.
FCE, which provides automotive and mobility-related financial products to customers, had a balance sheet of more than £14bn at the end of September, which the company estimated could rise to £15bn by the end of the year.
Like other big car-makers, Ford owns a big credit business which offers vehicle finance and insurance products to customers.
News of the potential application to regulators in Germany comes just days after the automotive group confirmed that 1100 jobs at its Bridgend engine plant in Wales could disappear by 2021.
Unions criticised the Bridgend move, which plunged Ford directly into the heart of the debate about the future of British car manufacturing after Brexit.
Ministers have scrambled to reassure workers across the industry that Brexit will not diminish their employment prospects, and were in damage limitation mode on Monday when the owner of Peugeot and Citroen bought Vauxhall’s European parent company in a £1.9bn deal.
In its most recent update to investors, relating to the quarter ended September 2016, FCE said: “Until the nature of the relationship between the UK and EU is better established, it will not be clear what, if any, effect Brexit has on FCE.”
A spokesman for FCE insisted that the new project related only to the potential application for a German banking licence, and said the issue of relocating the business’s headquarters to Germany was not on the agenda.
He claimed that the project could require additional personnel in the short term, but declined to comment on possible job relocations once the UK has left the EU.
The spokesman also said that the number of people employed at FCE in the UK was “in the low hundreds” but declined to provide a specific figure.
In a letter to staff written before last June’s referendum, Nick Rothwell, FCE’s chief executive, warned of “deep concerns about the uncertainty and potential downsides for our business that could arise if the UK votes to leave the European Union”.
Writing alongside UK director Andy Barratt, he added: “Although the full consequences of this are unknown, we estimate that the potential cost to our business could be hundreds of millions of dollars every year.”
By Victor Reklaitis
10 March 2017
When it comes to Brexit’s winners and losers, Berlin looks set to snag a few victories — especially the city’s growing financial-technology sector.
Germany’s capital has generated buzz for its efforts to attract London’s fintech companies and other startups since the U.K. voted last year to leave the European Union. A rolling billboard (“Keep calm and move to Berlin”) is one of the stunts that have ruffled British feathers.
But Berlin’s gains might not come from a Brexit-driven exodus — that is, from U.K.-based technology companies abandoning their homeland. Instead, its fintech scene will benefit from U.S. and Asian businesses actively choosing Berlin, and not London, as their EU base.
That at least is the prediction from Stefan Franzke, CEO at Berlin Partner, a business development agency. He estimates that Berlin is home to roughly 80 to 100 fintechs and expects that number to double by late 2018.
Most of that growth will come from “our own ecosystem here in Berlin, and that people from Asia and America who want to enter the European market — that they will do it more from Berlin than from London — because nobody knows what the Brexit means for their own business situation,” Franzke told MarketWatch. He was speaking last year, but the recent stumbling blocks to the British government’s EU withdrawal plan have only heightened the uncertainty.
London: Not dead yet, but ceding some ground
To be sure, Londoners have played down the Brexit threat to the U.K. capital’s fintech crown. Prominent venture capitalist Eileen Burbidge, for example, has said the likely loss of passporting — the mechanism that allows businesses to seamlessly operate across the 28 EU member nations — is a clear headache for London’s big banks, but not for the city’s fintech sector.
That sector — populated by companies such as online banks and insurance brokers, peer-to-peer lenders, payment app developers — is less likely to be covered by the regulations designed for the traditional financial industry.
At the same time, Germany is already catching up, by some measures. Funding inflows for the country’s fintech sector totaled $421 million in last year’s first three quarters, topping the U.K.’s $375 million, as shown in the chart above from accounting giant EY.
The U.K. had beaten Germany in this area in the four prior years. It remained ahead when it came to the number of deals, as the chart below shows.
“Owing to a vibrant and rapidly developing fintech ecosystem, Germany has become Europe’s second-largest fintech hub over the past three years, rivalling the U.K.,” EY analysts said in a recent report.
“In light of the Brexit and an expanding fintech ecosystem, Germany is well positioned to capture part of U.K.-bound funding post-Brexit and strengthen its position in the European fintech market,” they added.
Berlin’s advantages, and it’s not all Brexit cheers
But London’s fintech scene is going to be hard to overtake, given advantages like the U.K. capital being a top financial hub and the English language serving as the business world’s lingua franca nowadays.
“There’s been a few hundred years of finance history — trading, infrastructure, legal and everything else. That’s just not going to go away overnight,” Jeremy Sosabowski, chief executive of U.K.-based financial-software developer AlgoDynamix, has said.
Franzke countered that by noting most Berliners speak a language besides German and pointing out one-third of the city’s startup employees are from outside the country. In addition, the German capital offers much cheaper housing and office space, as well as other advantages, he said.
FinLeap — a self-described “company builder” that has launched 11 fintech ventures — uses English as its in-house language, said co-founder Ramin Niroumand, as there are about 30 different nationalities among its roughly 400 employees.
A banking platform — SolarisBank — is the FinLeap venture that might benefit most from Brexit, as it helps companies operating in the EU, Niroumand said. He added that its other ventures might not see much impact. The Berlin-based company’s portfolio ranges from insurance broker Clark to investments platform Savedo.
The company has experienced a specific Brexit effect — a jump in job applications from talent in the U.K., according to Niroumand.
That’s despite the reputation German startups have in some quarters for being copycats — that is, replicating innovative ideas already successful elsewhere rather than breaking new ground themselves. Much of the flak derives from “clone factory” Rocket Internet SE’s RKET, -1.81% strategy over the years.
Niroumand pushed back against those critics.
“For me, ‘copycats’ in general is nothing bad,” he said. “It has such a negative sense, but to find a model which works on another market and adopt it to the local market, it’s not that easy.”
Echoing comments that he made in a blog post, Niroumand also stressed that he thinks Brexit is not an entirely positive thing for Berlin, saying the U.K.’s upcoming departure from the EU is “hurting us all in the end.”
The FinLeap partner emphasized that he isn’t that focused on the threat from British fintech rivals. Instead, he worries about how much ground U.S. and Chinese payments giants — think Visa and Alibaba — are making in Europe.
“I don’t wake up every morning and say, ‘How can I beat London today?,’” he said. “That’s not the way we think.”
By William Turvill
6 March 2017
A German economics minister has spoken confidently of winning euro clearing power from London after Brexit.
Tarek Al-Wazir, a minister for the state of Hesse, said he expects Frankfurt, which is in his district, to be among the beneficiaries.
“It is hard to imagine that most business in euros will be booked in London after Brexit. Europe needs access if anything goes wrong,” he told Reuters in an interview.
“From the [European Central Bank’s] point of view, London is offshore after Brexit.”
He added: “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.”
Several high-profile City figures and financial experts have warned EU nations against making a grab for euro clearing.
Craig Pirrong, a finance professor at the University of Houston and clearing expert, said the process of wrenching the activity from London would be “very complicated”.
“It’s like trying to separate Siamese twins joined at the head or something like that,” he told City A.M.
“All these deals pretty much are going to be done under UK law. So how are you going to have the clearing in Europe and then these deals done in the UK – are they basically going to have to be re-papered, redone?
“There are just a lot of complications just in terms of the legalities of the contracts. You’re not just moving where the book-keeping is done, you’re also moving the jurisdiction of the law… and that’s not an easy thing to do when you’re talking about the mass of contracts involved here, and the amount of money involved.”
He added that, with clearing more spread across the continent, costs for customers would be increased.
Sir Jon Cunliffe, deputy governor of the Bank of England, last month hit out at “currency nationalism”, saying: “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.”
He also said a forced move out of London could push up transaction costs for clearing house customers.
By Maya Nikolaeva
10 March 2017
France sets out to dispel a national stereotype in its latest advertising push to lure financial companies from Britain, with the slogan: “You think we don’t work much? We just like to be effective.”
Paris, Frankfurt, Dublin and other European centres are keen to persuade London-based banks to shift some of their business abroad in order to continue to be able to offer services throughout the EU after Britain leaves the bloc.
The French capital started an advertising campaign in London last summer with the catch phrase “Tired of fog? Try the frogs!”
Since then, only HSBC, which already has a subsidiary in Paris, has said it will move significant business to France. It plans to relocate staff responsible for generating around a fifth of its UK-based trading revenue to Paris.
French officials have acknowledged France’s strict labour laws can put off businesses, while bankers say high employers’ payroll charges and a frequently changing tax system put Paris at a disadvantage.
The new advertising campaign, launched in London this week by the Ile-de-France region that includes Paris, seeks to dispel some of these concerns.
“You think we live in a fiscal frenzy? We are just tax-imaginative in the right way,” it says.
A person involved in coordinating the Paris campaign acknowledged that another deterrent for the British firms is uncertainty over the outcome of the French presidential election in April and May.
“On the one hand, they are eager to make a choice and have a maximum of time to organise things…but doing it before French elections is not very logical given differences in the candidates’ programmes,” this person said.
Investors are nervous about a possible win for far-right candidate Marine Le Pen, who calls for a referendum on France’s EU membership and wants to take the country out of the euro. Polls suggest, however, that she will lose in the second round to independent centrist Emmanuel Macron.
12 March 2017
Companies looking for a new home after Brexit have not been put off France by the prospect of an election victory by the far-right National Front, the boss charged with running Paris’ business district has said.
Marie-Celie Guillaume, the head of Defacto – the local authority responsible for managing La Defense, France’s business district in the west of Paris – told the Press Association that companies are keeping an eye on the elections, but that Marine Le Pen herself is not an obstacle to relocating.
When asked whether the mere chance of a far-right victory was causing companies to put off committing to Paris, she said: “I don’t think so, no, because there are a lot of companies arriving and they keep on arriving.”
“A lot of new companies are arriving in the business district from France and from abroad and what we believe is that Brexit will accelerate that good tendency, and that is why the investors have confirmed their interest in building new towers.”
It suggests Brexit is posing a bigger threat to business investment in Britain than the spectre of a National Front presidency in France, although Ms Guillaume said she was “confident” that the drawn-out election process will bump Ms Le Pen out of the race.
Rival presidential candidates including centre-right Republican Francois Fillon and centrist Emmanuel Macron are expected to introduce more business-friendly measures if elected, including loosening the country’s strict employment laws that make it harder to fire workers – a big put-off for banks.
“This is something that is very much expected, particularly in the financial sector. So what we will probably go towards is some flexibility depending on the sector – which is a new position in France,” Ms Guillaume said.
A number of UK-based firms, particularly financial services, have been searching for a new continental home to house their European headquarters or a new subsidiary in order to access the EU’s single market in the wake of Brexit.
It comes after Prime Minister Theresa May confirmed that Britain would scrap its single market membership as part of a hard Brexit.
La Defense is charging ahead with plans to build seven new skyscrapers over the next four years with renewed vigour – and Ms Guillaume says the district is already in a position to immediately accommodate 20,000 additional workers in La Defense.
“Obviously, Brexit has provoked new interest in La Defense,” she said.
But the City of London Corporation, which governs the Square Mile, said it expects London to retain its crown as king of financial services in Europe.
A spokesman for the Corporation said: “Firms see locational options as a straightforward business decision. Factors such as Brexit and national elections will play into these decisions. However, they will not be the sole focus.
“London has long been established as the world’s leading financial services centre, part of which is due to its prosperous relationship with the EU. It is in the best interests to the UK and the remaining EU 27 to continue this strong relationship.
“We firmly believe London will continue to thrive as the world’s leading financial, professional and business service centre.”
However, Ms Guillaume assured that La Defense is not trying to poach business from London and said the district wants to encourage the growth of a diverse business community rather than put all of its eggs in one basket with financial services.
Of the near-500 companies already established La Defense, 16% are insurers and banks, 19% are audit and consultancy firms, while energy and manufacturing make up 18% and 19%, respectively. The rest are are a mix of information, communication and other business sectors.
“It is a strength to have diversity because of course if you have a very, very strong financial sector and something happens in world finance, it’s a catastrophe.”
By Joe Brennan
10 March 2017
Legg Mason, the global investment firm with more than $710 billion (€670 billion) of assets under management, plans to set up a fund management company in Dublin to maintain access to investors in the European Union after Brexit.
“The firm has a management company in the UK and will have one in Dublin to allow us flexibility to serve clients, as needed,” a spokeswoman for the US group told The Irish Times. “As the outline of Brexit becomes clearer, we are well-positioned to respond as needed to ensure we are ready to serve our clients.”
The spokeswoman declined to say how many jobs would be involved. Legg Mason has a range of Irish domiciled and regulated bonds and equities funds, but the management company, under which the funds can be marketed around the EU, is based in the UK.
The news comes a week after UK asset manager M&G Investments announced plans to set up a management company in Luxembourg, quashing speculation that it might choose Dublin.
Global fund assets
More than $2 trillion of global fund assets are domiciled in Ireland in an industry that employs about 14,000 people. While the Central Bank has authorised a number of management companies (ManCos) for EU-regulated funds, known as undertakings for collective investment in transferable securities (Ucits) and alternative investment funds (AIFs), many firms are understood to be weighing setting up so-called super ManCos.
Industry sources said a number of investment firms were now looking at setting up such structures in Ireland as the UK begins its negotiations to leave the EU. They would typically employ between 20 and 50 people to demonstrate that they have substantive operations and that the “mind and will” of the entities are in Ireland.
Meanwhile, the Central Bank’s head of insurance supervision, Sylvia Cronin, said her office had received five insurance authorisation applications in the past four months as firms prepare for Brexit, while a further five companies have signalled a “firm intention” to apply to be regulated in the State. A further 20 insurers have contacted the bank to discuss authorisation, she told an event in Dublin.
Lloyds of London insurer Beazley said it planned to hire additional staff in Ireland to establish a European insurance company in Dublin, while rival Hiscox is also believed to have shortlisted Dublin as it sets up a base to service EU clients after Brexit. Cardiff-based motor insurance group Admiral also signalled it may move business to Dublin.
However, on Wednesday, US insurance giant AIG, which employs 400 staff in Ireland, decided to relocate its European regional headquarters from London to Luxembourg instead of to Dublin.
Separately, Fine Gael deputy leader James Reilly added to Brexit speculation when he said at an Oireachtas committee hearing he knew “for a fact that there are 450 jobs coming to Ireland from a major financial services company”. He didn’t identify the firm.
Taoiseach Enda Kenny told reporters in Brussels as he arrived for an EU summit that he was “absolutely convinced we will win substantial” financial services business from Brexit.
By Huw Jones
9 March 2017
Britain could face limits on the number of euro financial transactions it handles unless it allows European Union supervision of clearing houses in London after Brexit, EU lawmakers said on Thursday.
Britain is Europe’s biggest financial centre, trading and clearing a large number of euros and euro-denominated transactions such as derivatives, supporting thousands of jobs.
After its departure from the EU, Brussels would have no direct say over how risks to EU financial stability from such trading is handled.
“This is about what is the amount of financial risks that you allow somebody else outside the EU to manage. There are limits to what you can allow,” Olivier Guersent, a top official at the European Commission, told the European Parliament’s economic affairs committee on Thursday.
He was responding to concerns from committee members about how the bloc’s system of “equivalence” will work after Britain leaves the EU.
Equivalence refers to the EU granting market access for a non-EU firm if it complies with rules similar to those in the bloc, and Guersent expects banks based in Britain to apply for it.
The lawmakers, who will have a veto over a future EU trade deal with Britain, said they had serious concerns about London still dominating euro-denominated trading after Brexit.
Burkhard Balz, a centre-right German lawmaker, doubted that equivalence offered enough guarantees to ensure “high quality” supervision of euro clearing conducted outside the EU.
“We have serious concerns about the future of these transactions once the Brexit is implemented, and current legislation needs to be adjusted in order to ensure that supervision of euro derivatives falls under the responsibility of EU institutions,” Balz said.
A German centre-left lawmaker, Jakob von Weizsaecker called for a “sliding scale” of measures to stop financial stability risks entering the bloc from outside, with “repatriation” of trading activities as a last resort.
Equivalence was never designed for “systemically important volumes” a Britain outside the EU would represent, another lawmaker said.
The concerns echo comments from the European Central Bank, whose previous attempt to force large swathes of euro-denominated clearing to move from Britain to the euro zone, failed.
Sabine Lautenschlaeger, a top ECB official said this month that keeping euro clearing in London after Brexit would depend on whether the new UK-EU trading terms kept the central bank involved in supervision.
Steven Maijoor, chairman of the EU’s European Securities and Markets Authority, said there was a need to beef up checks of whether non-EU regulators and financial firms continued to meet equivalence requirements.
Under the current system there were clear limits to how much the EU could mitigate risks from euro clearing from outside the bloc, Maijoor added.
By Lisa Du and Katherine Chiglinsky
9 March 2017
American International Group, the global provider of commercial property insurance, said it plans to open an insurer in Luxembourg to write business in the European Economic Area and Switzerland once the UK exits the EU.
“This is a decisive move that ensures AIG is positioned for whatever form the UK’s exit from the EU ultimately takes,” Anthony Baldwin, chief executive officer of AIG Europe, said on Wednesday in a statement. “We are ensuring that our clients and partners experience no disruption from the UK’s EU exit.”
Financial firms are shaping their Brexit plans after Prime Minister Theresa May announced in January that the UK would leave the EU’s single market in 2019, likely spelling the end of passporting, where companies seamlessly service the rest of the bloc from their London operations.
AIG currently writes business in Europe from a single insurer based in the UK. The New York-based company has more than 2,000 employees based in London and has already been cutting staff there and in other cities as part of a separate cost-cutting initiative.
The reorganisation is expected to be completed in the first quarter of 2019, and AIG will retain an insurer in the UK for sales in that market, according to the statement. Nicola Ratchford, a spokeswoman for the insurer, said the company has a few employees already in Luxembourg. She said there might be shifts in the leadership ranks in Europe, but that it is too soon to know how many workers will move, or to comment on real estate decisions.
AIG chief executive Peter Hancock said before the Brexit referendum last year that he’d consider an operations hub in continental Europe if UK voters opted to leave the EU. Luxembourg is among European cities seeking to attract banks and insurers that are looking to open EU hubs.
“Luxembourg, a founding member of the EU, offers us a secure location in a stable economy with an experienced and well-respected regulator in continental Europe close to many of our major markets,” Baldwin said in the statement.
AIG’s Europe segment had about $5.4bn (£4.4bn) in operating revenue last year, about 11 per cent of the insurer’s total, according to the company’s most recent annual report.
13 March 2017
Academics are already planning to leave the UK in the face of uncertainty on their rights after Brexit, university leaders have claimed.
The heads of 35 Oxford University colleges have warned that the institution will suffer “enormous damage” if European Union staff lose their right to work in Britain.
They urged the government to back a House of Lords amendment to the Brexit bill which guarantees protections for EU nationals living in the UK.
In a letter to the Times, signed by vice-chancellor Professor Louise Richardson and all but three Oxford college heads, they said the government’s promises had not provided reassurance.
“Oxford University relies on EU citizens as lecturers, researchers and support staff. If they lost their right to work here our university would suffer enormous damage which, given our role in research, would have reverberations across the UK,” they wrote.
“Our EU colleagues are not reassured by a government which tells them that deportation is not going to happen but declines to convert that assurance into law; some are worried, some are already making plans to leave.
“Many of our staff don’t know whether absences abroad on research contracts will count against them. Others do not know, however longstanding their work and residence, whether their children will be able to remain in the UK.”
Almost a fifth of UK academics in 2015-16 were from the EU.
MPs are expected to throw out the changes to the Brexit bill made by peers when it returns to the House of Commons on Monday.
The bill will then go back to the Lords and, providing peers allow it to pass, the prime minister could trigger Britain’s divorce from the EU as early as Tuesday.
13 March 2017
Top British and American bank executives have set up a group to stimulate closer financial services links between the two countries after the UK leaves the European Union, sources told Bloomberg.
They said the industry lobby group TheCityUK has created a committee led by managers at Barclays and JPMorgan Chase to explore potential trade and investment deals after Brexit.
According to the sources, the committee is working with the UK Treasury and the Financial Services Trade and Investment Board, but it’s not clear yet what agreements will be pursued. Britain is not officially allowed to negotiate new deals until it exits the EU.
Fears UK Prime Minister Theresa May is ready to pull Britain out of the EU single market have been mounting lately. Bloomberg sources said investment banks in London are increasingly concerned the UK and EU negotiators won’t reach an agreement over what May has called a “phased implementation period” for Brexit.
Bankers also worried about London’s ability to retain dominance over European finance, claiming it could lose business to other financial centers such as Frankfurt, Paris, and Dublin.
Financial institutions have already warned a mass exodus of London bankers may start this year.
City banks said they are finalizing post-Brexit plans on how much of their business needs to shift to maintain relationships with the remaining 27 EU member states.
HSBC said it was moving 1,000 jobs from its London-based investment bank to Paris.
JPMorgan Chase CEO Jamie Dimon said more than 4,000 of the bank’s 16,000 UK staff could be displaced. He did not specify, however, where they might move.
Since Britain’s vote to leave the European Union, cities like Paris, Amsterdam, Luxembourg, and Frankfurt have been vying to become the new center of international finance.
France announced seven new skyscrapers will be built in the Paris business district over the next four years as part of the city’s campaign to lure London-based financial companies.
The UK government, however, said it will fight to maintain the City’s position as an international business hub. It is currently studying what agreements may be struck with countries including Australia, Canada, and South Africa.
By Tony Barber
7 March 2017
In the forthcoming Brexit talks, Spain and Poland will be the fourth and fifth-largest countries in the EU-27 camp. Madrid and Warsaw have good reasons for wanting an amicable British departure from the EU. Each favours close post-Brexit relations with London. However, certain points of contention in the Brexit process may not be easy to clear up.
Spanish-UK trade and investment links loom large over Brexit. Spain has a trade surplus in goods with Britain. The UK is the biggest destination for Spanish investment abroad, absorbing about 17 per cent of the total. Banks such as Santander and Banco de Sabadell play leading roles in British finance. No less prominent in the UK are Spanish companies such as FCC in construction and services, Ferrovial in airports and Telefónica in telecommunications. Meanwhile, British companies are the third-biggest foreign investors in Spain.
As Mariano Rajoy, Spain’s prime minister, told a conference in January, the UK is critically important to Spain’s tourism industry. He estimated that almost 17m Britons visited Spain in 2016 — one in five of all tourists. Moreover, some 300,000 Britons reside in Spain. Another half million or more spend part of the year there. About 137,000 Spaniards lived in the UK in 2015, according to the Migration Observatory institute.
These economic and human ties illustrate the need for a sensible Brexit deal. But there is also a political dimension. Europe’s most vocal pro-independence movements are in Scotland and Catalonia. London and Madrid share an interest in containing separatism, an objective arguably more attainable under a constructive Brexit settlement.
One awkward issue is Gibraltar, the British possession on Spain’s southern coast. Madrid has suggested “co-sovereignty” over the Rock, but knows this is a non-starter for the fervently pro-British Gibraltarians.
However, Gibraltar relies on free movement of goods and labour with the EU. “If Gibraltar wants a relationship with the EU, it will have to go through us. And that will require a bilateral agreement between Spain and the UK,” says Alfonso Dastis, Spain’s foreign minister.
In Poland’s case, the conservative nationalist Law and Justice government in Warsaw was profoundly dismayed by Britain’s vote to leave the EU. Aleks Szczerbiak, a University of Sussex professor, explains that the government viewed London as an ally in fending off criticism from Brussels over its adherence to the rule of law.
Warsaw also warmed to the British vision of an EU with some powers restored to national governments. It was reassured by the robust British attitude to Russia, which it contrasted with Moscow-friendly tendencies in Paris and Rome.
Recent high-level contacts between Poland and UK make it clear that, after Brexit, the two sides will strive to maintain close defence and security ties. However, there are potential sources of friction.
Poland receives more money than other EU states from the bloc’s regional aid budget. If Britain were to try to reduce its Brexit bill by limiting its aid commitments, this would go down badly in Warsaw.
Still more important is the status of the roughly 900,000 Poles who live in the UK. The Polish government, keen to stimulate the domestic economy, would like many migrant workers to return home. It estimates that 100,000 to 200,000 will do so because of Brexit.
But any Polish government will feel compelled to defend the rights of Poles who remain in the UK. On this issue, if Britain wants Polish help in securing a good relationship with the EU, it will need to adopt an enlightened approach.
General Brexit news:
By Rowena Mason
7 March 2017
The House of Lords has voted to give parliament a veto over the final outcome of Theresa May’s Brexit negotiations, inflicting a second defeat on the government’s article 50 bill.
Peers supported a Labour-led amendment by 366 to 268, despite the government’s argument that it would “damage the national interest” by making May’s Brexit negotiations more difficult.
Michael Heseltine, the Conservative former deputy prime minister, was one of those leading the rebellion against the government’s position, along with Labour, Liberal Democrat and crossbench peers.
“Everyone in this house knows that we now face the most momentous peacetime decision of our time,” he said. “And this amendment secures in law the government’s commitment … to ensure that parliament is the ultimate custodian of our national sovereignty.
“It ensures that parliament has the critical role in determining the future that we will bequeath to generations of young people.”
The government had rejected the amendment, saying it would weaken May’s hand by denying her the ability to walk away from the negotiating table.
George Bridges, a Tory peer and minister, said it would “make negotiations much harder from day one for the prime minister” by increasing the incentive for EU countries to offer the UK a bad deal in the hope of getting parliament to scupper Brexit.
The Brexit bill will now return to the House of Commons with the amendment forcing May to have a vote on her Brexit deal and another guaranteeing the rights of EU citizens.
MPs are likely to overturn those amendments, although some Conservative MPs remain unhappy that it is not clear whether parliament will get a vote if May ends up trying to take the UK out of the EU without a deal having been struck.
This will send the Brexit bill back to the House of Lords, which may end up backing down and acknowledging the supremacy of the Commons.
May has already verbally promised that parliament will get a vote on her Brexit deal but this will be on a “take-it-or-leave-it” basis, as the choices would be accepting the terms or crashing out of the EU to rely on World Trade Organisation rules.
But the House of Lords decided that the promise of a parliamentary vote on the outcome of the Brexit talks with the EU must be set down in legislation. Earlier, the peers voted against putting the outcome to a second referendum.
There were heated clashes in the Lords as a string of Conservative peers accused other members of trying to frustrate the progress of Breixt.
Lord Forsyth, the former Scotland secretary, said: “These amendments are trying to tie down the prime minister. Tie her down by her hair, by her arms, by her legs, in every conceivable way in order to prevent her getting an agreement, and in order to prevent us leaving the European Union.”
Nigel Lawson, a former Conservative chancellor, said the amendment forcing a parliamentary vote regardless of the outcome of talks would be an “unconscionable rejection of the referendum result, which would drive a far greater wedge between the political class and the British people than the dangerous gulf that already exists”.
The only practical effect would be to create a “political crisis” with highly damaging uncertainty for business and the economy which could only be resolved by a general election, he said.
But another former Tory cabinet minister, Douglas Hogg, denied supporters of the move wanted to stand in the way of the bill.
“The sole purpose is to ensure the outcome – agreed terms or no agreed terms – is subject to the unfettered discretion of parliament,” he said. “It is parliament, not the executive, which should be the final arbiter of our country’s future.”
The amendment would not only enable parliament to reject a “bad deal” but to “prevent Brexit altogether by refusing to allow the UK to leave the EU without agreement”, he added.
By Tom Peck
13 March 2017
Article 50 will not be activated this week, Downing Street has revealed.
Whitehall civil servants had been told to prepare for the triggering of the formal mechanism to withdraw the UK from the European Union as early as Tuesday.
But a spokesman for Theresa May said the Article 50 process would now not be initiated until next week at the earliest.
Asked if the Prime Minister intended to trigger Article 50 tomorrow, her spokesman said: “We have been clear. The Prime Minister will trigger Article 50 by the end of March.”
It had been rumoured that the Article 50 bill would be passed by the Commons on Monday night and receive royal ascent on Tuesday morning, in time for the Prime Minister to formally give notification to Brussels the same day, but Downing Street has dismissed such speculation.
Her spokesman said: “I’ve said END many times but it wd seem I didn’t put it in capital letters quite strongly enough.”
It comes after SNP leader Nicola Sturgeon announced plans to call for a second referendum on Scotland’s independence.
The Scottish First Minister said on Monday morning that a second poll would give Scotland a choice between Ms May’s Brexit deal and remaining in the EU as an independent country.
Responding to that statement, the Prime Minister said: “The tunnel vision that the SNP has shown today is deeply regrettable. It sets Scotland on a course for more uncertainty and division, creating huge uncertainty,” the PM said.
“This is at a time when the Scottish people, the majority of the Scottish people, do not want a second independence referendum.
“Instead of playing politics with the future of our country the Scottish government should focus on delivering good government and public services for the people of Scotland. Politics is not a game.”
By Mark Kleinman
9 March 2017
Theresa May has sought to reassure growing City anxiety about the impact of a “hard” Brexit, promising Wall Street bankers that she will seek to protect London’s crucial role as a global financial centre during negotiations with her European counterparts.
Sky News has learnt that the Prime Minister attended an event hosted by Morgan Stanley on Wednesday night at which she made an explicit attempt to allay fears about a so-called “cliff-edge” at the point of the UK’s departure from the European Union (EU).
Mrs May is said to have told the audience that she recognised the contribution made by Wall Street banks to the British economy – a remark interpreted by senior City figures as addressing concerns that she is lukewarm about the financial services sector.
The event, in central London, was attended by Morgan Stanley boss James Gorman, as well as prominent British businessmen including Douglas Flint, the HSBC chairman, and Martin Gilbert, chief executive of Aberdeen Asset Management.
It comes just days before the PM is expected to trigger the Article 50 process that will culminate in the UK leaving the EU in 2019.
Mrs May had met with Mr Gorman, along with the heads of other US financial institutions, in Switzerland in January, since when their contingency planning ahead of Brexit has intensified.
A person who attended Wednesday’s event said the Morgan Stanley boss had reiterated his desire for Brexit to prompt as few of the bank’s employees to relocate from the UK as possible.
Morgan Stanley was among the major donors to Britain Stronger in Europe, the official campaign group for staying in the EU.
Wall Street banks have warned consistently that the loss of access to the EU’s “passporting” regime, which enables firms to trade seamlessly across Europe’s borders, would lead to them relocating jobs from London.
Recent reports suggested that Morgan Stanley planned to move roughly 300 London-based jobs to Dublin and Frankfurt.
A spokesman for the bank said last month: “Our focus is on ensuring that we can continue to service our clients whatever the Brexit 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.”
The eventual outcome of banks’ preparations will largely be determined by the scope and duration of any transitional deal enabling them to continue serving clients across European borders from the UK.
Mrs May has said that Brexit will entail the UK leaving both the EU single market and its customs union, prompting calls from business lobbying groups for a bespoke deal which protects the interests of key sectors.
Any explicit move to safeguard the City carries political risk for Mrs May, however, given the low public esteem in which parts of the financial services industry continues to be held.
Morgan Stanley and Downing Street spokesmen both declined to comment on Wednesday’s event or Mrs May’s remarks.
By Joe Watts
8 March 2017
Philip Hammond will set out a Budget to steel Britain for Brexit as he admits the public has deep-seated concerns over the country’s future.
In his first full Budget statement, the Chancellor will concede ministers must work to convince worried voters their children can thrive once Britain quits Europe.
Mr Hammond will also accept many families are still struggling 10 years on from the financial crash that crippled the county’s economy, even though seven of them have been under a Conservative-led government.
But the Chancellor will still use his statement in the Commons on Wednesday to try and give an upbeat assessment of the UK’s economic prospects, as Theresa May prepares to launch EU withdrawal talks.
It comes after Ms May’s hopes of securing smooth passage for her Bill to trigger Brexit, were dealt a blow when the House of Lords defied her and backed a plan to give Parliament, not Downing Street, the final say over any withdrawal deal.
Mr Hammond, meanwhile, was given something of a boost after the Organisation for Economic Co-operation and Development revised up its 2017 growth forecast for the UK, albeit still warning of a Brexit drag on the economy next year.
The Chancellor had already revealed he would set aside a Brexit war-chest of some £60bn by 2020 to help mitigate negative impacts of leaving the EU. Having also previously warned of a pending “roller-coaster ride” for the economy between now and then, his Budget will aim to calm the country ahead of uncertain times ahead.
He was to promise that the country the Government wants to build after Brexit will be “a stronger, fairer, better Britain, outside the EU”.
But Mr Hammond was to add that he “understands the concerns of those who worry about their children’s ability to access the opportunities they themselves enjoyed, in our rapidly changing economy”.
He planned to tell MPs that “a strong economy is built on resilience” and that the Government will continue reducing the deficit, indicating on-going cuts, and “not shirking the difficult decisions on tax and spending, while still investing in Britain’s future”.
But the Chancellor will then say that he knows that “many are still feeling the pinch, almost 10 years on from the financial crash”.
Signalling potential help for cash-strapped households – including a possible further freeze on fuel duty – he was to promise the Government “will do everything it can to help ordinary working families”.
The Chancellor has already set out some planned spending aimed at boosting young people’s education, including £500m for a technical education overhaul and £320m for more free schools, many of which may be selective following on from Ms May’s pledge to roll out grammar school places.
He has also promised a £1.3bn cash boost for social care with councils across the country complaining that the system for looking after the elderly and the disabled is at breaking point.
But his statement comes just weeks before Ms May is expected to trigger Article 50, bringing with it potential economic uncertainty and the prospect of rising prices.
The OECD revised up its 2017 growth forecast for the UK due to a less severe impact from Brexit than it previously anticipated, in a report on Tuesday.
But the 2018 forecast for UK growth of 1 per cent is lower than the rest of the G7, excluding Japan and Italy, with Brexit thought to be a key factor.
The meagre 2018 rise is also the weakest performance from the UK since the depths of the global financial crisis in 2009, with the report stating: “UK growth is expected to ease further as rising inflation weighs on real incomes and consumption, and business investment weakens amidst uncertainty about the United Kingdom’s future trading relations with its partners.”
Brexit also gave the Prime Minister a headache on Tuesday after peers approved a plan to give Parliament the final say over Brexit.
Lords voted by a large majority for the proposal forcing Ms May to seek Parliament’s backing for any withdrawal deal she agrees with the EU, and also if she decides to see through her threat of pulling Britain out of the EU with no deal at all.
Brexit Secretary David Davis vowed to overturn the changes to the Government’s Bill to trigger Article 50 when it returns to the House of Commons.
By Niamh McIntyre
12 March 2017
Brexit negotiators are confident they can dramatically reduce the size of any bill for leaving the EU, according to legal documents circulated in the Department for Exiting the European Union.
It has previously been suggested that the UK might have to pay around £50bn to the EU after Article 50 was triggered, to plug the deficit in its budget the departure will cause.
The document was drawn up by Martin Howe QC, a founding member of Lawyers for Britain, a group of lawyers who campaigned for Britain to leave the EU in last year’s referendum.
It advises that the demand for payments into the European budget after Britain has left the EU is “wholly without merit in law”, and that it is “hard to see any credible basis upon which the UK could be said to be obliged” to pay for the deficit.
Mr Howe believes that a key point of leverage is the UK’s funds in the European Investment Bank (EIB). The UK has a 16 per cent share of the €63.3bn capital of the bank, amounting to €10.1bn (£8.8bn).
The guidance concludes: “Overall the UK should be entitled on exit to a net payment in its favour, corresponding to the value of its capital invested in the EIB.”
Theresa May is expected to formally trigger Article 50 this week, after the bill paving the way for Britain’s departure is due to be debated on Monday.
Jolyon Maugham QC, a barrister who launched a legal challenge last year arguing that Article 50 should be revocable once it is activated, so that the UK would not be forced to accept any Brexit deal, told The Independent he questioned the credibility of Mr Howe’s advice.
“Martin Howe is an odd choice for the Government to be taking advice from, given that he doesn’t specialise in any relevant field.
“To seek out proper advice, you shouldn’t simply go to a lawyer who tells you what you want to hear.
“It’s not clear that the Government are going to act on this advice, but if it did, it would be a fantastically stupid thing to do.
“It’s rather telling that the Government keeps pushing this line – that there’s being no need to pay the EU any money, that the EU actually owe us money.
“We are being prepared for a complete breakdown in negotiations.”
A Treasury document leaked to The Independent indicates that Theresa May’s plans to rely on World Trade Organisation tariffs in the case of a hard Brexit will cause a “major economic shock”
Crashing out of the EU without a trade deal is the “alternative to membership with the most negative long-term impact” on the economy, it warns.
Relying on World Trade Organisation tariffs would have serious consequences for companies, jobs and food prices, it states. The 36-page report uses language far stronger than that employed in the Treasury’s published analysis of Brexit’s long-term impact on the economy.