Brexit uncertainty has been at the forefront of the financial services industry, with a high number of variables weighing on venues, banks, and asset managers. A recent survey from the Confederation of British Industry (CBI) captured this trend, showing that nearly 40 percent of UK businesses believe that Brexit has hurt their investment plans.
The CBI survey encompassed 357 companies in the UK – of these, nearly 42 percent felt that Brexit was affecting their investment plans. The figure is not surprising given what has transpired in the financial services industry. Nowhere is this more evident than amongst banks and other financial venues operating in the UK, which have formalized plans to relocate their EU trading hubs to within the bloc.
Indeed, the lingering specter of Brexit has also clouded future outlooks, a prospect that appears even more uncertain in recent months. While the UK government had clung to a hardline stance over much of the past year, recent electoral setbacks have caused a softening of rhetoric, and perhaps passporting rights for banks and other groups will be salvaged after all.
For now though, the future looks anything but certain in the UK. According to the CBI report, of the 42 percent of respondents that feel affected by Brexit, nearly 98 percent view the effect on their investment decisions as negative. This contrasts with the remaining 58 percent of businesses that see Brexit as yielding no material effect on their investment plans.
It should be noted that the survey was not confined just to the financial services industry, but covered all sectors of the UK economy. However, many in the UK have taken an optimistic approach to the upcoming schism.
For example, Rain Newton-Smith, CBI chief economist, commented: “It is reassuring that the majority of businesses that responded to our survey do not feel that Brexit has changed these vital spending plans. But we must have our eyes wide open: an overwhelming number of those that did report an impact said it was negative.”
In terms of domestic financial markets, this space has largely averted a cataclysm to date though it remains to be seen what the financial sector will look like in a few years, with thousands of jobs slated to leave London for other cities within the EU, including Frankfurt, Dublin, Amsterdam, and others.
The financial services industry has been one of London’s brightest areas for decades – a trend that is at risk of being snapped.