Financial services firms pressing “the pause button” on Brexit contingency plans after transition agreement reached
A raft of financial services firms feel able “to put the pause button” on Brexit contingency plans after the transition agreement, the Confederation of British Industry’s (CBI) chief economist said today.
Rain Newton-Smith said that last week marked “a huge step forward” with the transition agreement struck between the UK and the rest of the EU,and that could be a confidence booster for financial services.
The UK will remain in the Single Market and customs union during the 21-month transition period, which will end on 31 December 2020.
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Newton-Smith told BBC’s Today programme said the CBI’s latest survey had shown growth had picked up, jobs were still being created amongst financial services firms, and profitability had strengthened. However, confidence had fallen “for over two years now”.
The CBI’s chief economist said there was no doubt uncertainty around Brexit is “looming large for this sector”, but it could be turning a corner off the back of the transition agreement.
“That means that a lot of the banks and insurance companies will be able to put the pause button on those contingency plans that they were having to put in place should we be in a position in a year’s time where we didn’t have a new agreement with the EU,” Newton-Smith said.
On Friday, the leaders of the EU gave the green light for Brexit negotiators to kick off trade talks along with the thumbs up to the transition agreement unveiled at the beginning of last week.
Uncertainty remains over the future for financial services, as the UK government has sought to secure them in part of an ambitious free trade deal, with the EU saying they would not be a part of any free trade deal.
Reports last week said the EU was mulling offering the UK “improved equivalence” as the basis of the future financial services relationship after Brexit.
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