Banks Lobbying for Favorable Treatment in Exit Talks
As Britain moves closer to its exit from the European Union (EU), banks have started to prepare for this eventuality with increasing calls to exclude banks from this arrangement, as it may be devastating for their businesses.
According to an industry report cited by Bloomberg, this move could cost banks and associated businesses in the U.K. almost $51.0 billion in lost revenue. The report, prepared by Oliver Wyman on behalf of TheCityUK lobby group, warns that almost 70,000 jobs and ₤10.0 billion of tax revenue are at risk from Brexit. (Source: “Global Banks Fight Back on Brexit, Warning $51 Billion at Stake,” Bloomberg, October 4, 2016.)
“A strong U.K.-based financial and related professional services industry is fundamental to a thriving economy,” wrote TheCityUK CEO Miles Celic in an e-mail. He added that a positive outcome to negotiations “would be mutually beneficial to the U.K. and the EU, would cause minimum disruption to the industry and the customers it serves, and help to ensure financial stability.” (Source: Ibid.)
British voters in a referendum last summer voted for the country’s exit from the EU, on hopes that this exit will improve the nation’s economy and help the country regain sovereignty over issues such as immigration and the flow of labor between the European borders. Despite the referendum result, Britain has yet to negotiate the terms of this exit with its European partners.
Over the weekend, British Prime Minister Theresa May set the end of March 2017 as the deadline to start a formal process to leave the EU. May said the U.K. would become “a fully independent, sovereign country” with “the freedom to make our own decisions on a whole host of different matters, from how we label our food to the way in which we choose to control immigration.” (Source: “British pound hits 31-year low against U.S. dollar,” CBC, October 4, 2016.)
This news has sent the British pound to a 31-year low against the U.S. dollar, as nervous investors deserted the currency—which used to be one of most valuable European currencies—on fears that Britain’s exit from the European economic bloc will have negative economic implications for the country.