Brexit deal confidence up but anxiety remains
A new survey from the Chartered Financial Analyst (CFA) Institute suggests there is increasing confidence among global investors that Britain will succeed in negotiating a trade deal after Brexit.
Nearly half of investment firms now expect talks between Britain and the EU to end with a trade deal. But they are split on whether this will include goods and services – 25 per cent think the deal will cover both, while 24 per cent think it likely to include goods only.
But this is far from the whole story. The Institute also found global investment firms still expect to take a hit from Brexit regardless of any trade agreement.
Worryingly, 80 per cent of professionals surveyed think Brexit will negatively impact UK returns. EU investors were particularly pessimistic: 90 per cent believe Brexit will be bad for UK investments.
Meanwhile, 67 per cent of UK investment firms think they will reduce their UK presence, while 76 per cent of EU investment firms expect to do the same.
In terms of financial centres, investors expect Frankfurt to be the main beneficiary of Brexit, with the top five rounded out by Paris, Amsterdam, Dublin and Luxembourg.
Progress
German and Swiss firms remain most pessimistic about Britain's chances of securing a satisfactory trade deal with the EU. Those polled in both countries see the UK crashing-out out of the EU as the most likely outcome of negotiations.
Given the apparent progress made on the outline of a transition deal on Monday, it’s possible that the results of the survey are already out of date. Nonetheless it shows the level of anxiety in financial quarters and this seems unlikely to ease.
That’s in large part due to the splits within the Conservative party over what a deal should look like.
All deals require some give and take but not for people like arch Brexiteer Jacob Rees-Moggwho we witnessed, on Wednesday, fail to take part in a rather farcical political stunt involving the throwing of dead fish into London’s River Thames in protest at Monday’s announcement.
Mr Rees-Mogg was prevented from boarding a fishing trawler to take part in the stunt, which involved former Ukip leader Nigel Farage, because the trawler was refused permission to dock at Westminster bridge pier – apparently because no one had spoken to Transport for Londonabout it doing so.
Whether you see this as a metaphor for either the inability of Brexiteers to think things through or the sort of needless bureaucracy we hope to be free of after Brexit is up to you.
Regardless, the level of tension around any deal could hardly be higher.
Brexiteers are up in arms about the EU securing fishing rights during the transition period but such rights have only been secured by the EU for a mere 21 months beyond 29 March 2019.
Irish question
Is this such a huge concession? One imagines there will be greater concessions the longer negotiations continue.
On the question of the Irish border alone, it is at present very likely that concessions will have to be made. UK and EU officials have been wrangling with the Irish question for months now without any progress – students of history will no doubt find this all a bit ironic.
Alongside Ireland, the issue of financial services’ access to the Single Market is without question one of the biggest negotiating hurdles the government faces.
Given Parliament will have a vote on whether to accept the deal the government agrees with Brussels, there are legitimate concerns, as expressed by the Germans and Swiss, over whether the UK will simply crash out of the EU altogether.
If the mere extension of fishing rights for less than two years can create such outrage among Brexiteers, what hope does a deal that is bound to involve further compromises have of getting through Parliament?
While there are some that might think making concessions on EU citizens’ rights, or the length of the transition period or fishing rights is somehow showing weakness to Brussels, there are – excuse the pun – much bigger fish to fry.
The City has every right to feel anxious.
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