Why ‘Brexit’ matters to US financial firms
Held in New York, on Friday November 18, 2016.
Hosted by Clifford Chance.
On Friday, November 18, the NY CSFI held a meeting at the offices of Clifford Chance on Brexit – the idea being to bring to a US audience the impact that the recent referendum might have on third-country financial firms – particularly American ones. Key speakers were Kay Swinburne from the EP (clearly a star), Mark Boleat (from the City Corporation and the EFSCAC), Anthony Belchambers (from the FSNF) and John Authers (from the FT). Our host was Nick O'Neill, a partner at Clifford Chance in NY specialising in financial regulation.
Not easy to extract a few themes – particularly given the Chatham House Rule. But, although most of the discussion was pretty downbeat, there was a general sense that, the City being what it is, we will pull through. One point that was made repeatedly was that Trump's election has focused European elites' attention on the existential threat that a Le Pen Presidency (and the threat of 'Frexit') would have for the EU as a whole – meaning that the British problem might well look a lot less intractable, if only in comparison. That, it was suggested, could work to Mrs May's advantage, in that there is clearly no desire in Continental Europe to fan the flames of populism/nationalism any further by bashing the Brits unnecessarily. Maybe.
Other than that, my takeaways are:
- The least amenable of the various Brussels bodies that are involved in the UK negotiations is likely to be the Parliament, with the arch-Federalist, Guy Verhofstadt, implacably determined to 'punish' the Brits for their temerity. He – not Michel Barnier – is the real threat to a sensible deal.
- There has got to be some sort of transition arrangement. It simply isn't going to be possible to sort everything out before the EP elections in May 2019, which will also produce a new College of Commissioners. Negotiating that transition should probably be the UK's priority.
- Though I was (deeply) skeptical, at least one of the panelists was convinced that bankers are already planning their move to Paris (gasp!) and (wait for it) Amsterdam (double gasp!). What everyone did agree was that decisions on moves cannot be long delayed, which means that 2017 is going to be a crucial year. If the UK wants the big boys to stay, the outlines of a deal are going to have to be on the table pretty soon.
- It was pointed out that, although the UK's exit from the EU can be achieved by QMV, the precise terms of any exit deal are governed by the unanimity rule. I wasn't sure exactly how important that is, but it is indicative of just how difficult negotiations may turn out to be if even Bulgaria has to be placated.
Oh, and no one dissented from the view that we need a 'bespoke' deal – the Norwegian or Swiss models simply won't work (although Canada might be worth looking at).