Many in the City are already looking beyond narrow “equivalence” arrangements on mutual market access. The focus is shifting outwards from the EU on to how the UK can protect its position as a global financial powerhouse.
Businesses are wargaming how Brexit and rapidly advancing technology can reshape the financial sector. Servicing of British investment funds has seeped offshore to lower-cost locations such as Dublin or Eastern Europe. The reintroduction of trade and regulatory barriers means offshoring this work to the Continent now makes less sense for some businesses. Similarly, the progress of new technology means cheaper overseas labour can now be undercut by software that can be run just as easily from the UK.
“The industry would like more opportunities to bring the broader aspects of investment management and servicing industries back onshore into the UK,” says Tony Gaughan, leader of global asset management at Deloitte. “You might argue that this horse bolted many, many years ago but there’s a feeling that we could have more different types of roles [in the UK] – probably less well paid but higher volume. I think there’s a growing feeling that many have not perhaps considered issues like growing the economic value of the investment industry to the regions, over the longer term.”
Some firms are weighing up whether to bring some operations back to the UK, particularly to places like Glasgow or Northern Ireland, he says.
The opportunities extend far beyond fund management and into growing areas such as fintech, green bonds and “sustainable” investment, where the UK is making inroads.
Ron Kalifa, the former Worldpay boss, is heading a review of how to boost the fintech sector, which is already a leader in areas such as digital payments.
Providing top-class infrastructure and technology to allow people and businesses “to access, borrow and invest their money, will all be critical areas of a competitive edge”, says Richard Hammell, Deloitte’s UK head of financial services.
“I think the UK is going to want to economically invest disproportionately in those areas to be the leading centre for the digital future of financial services.”
In an effort to attract more companies, particularly in tech, to choose London as a venue to list their shares, the Government has called in Lord Hill, the former EU commissioner, to explore possible rule changes. Suggestions include allowing dual share classes which would enable founders to retain a majority in shareholder votes even after reducing their stakes.
This change could help London to close the gap to New York, a favoured destination for tech founders taking their companies to public markets.