Innovate Finance Global Summit: Brexit Update from the CBI

Kylie Greeff
26th March 2018

This week our MD, Daniel Rajkumar and NxD Georgina Mitchell attended the Innovate Finance Global Summit in London.  The summit brought together the world’s leading innovators, institutions and investors to regulators, policymakers and startups. With the UK and EU greatly furthering the progress of the Transition Agreement on Monday, Brexit was a topic in everyone’s minds and guests at the summit enjoyed a robust panel discussion on Brexit and the Transition Agreement.

Panellists for the discussion included, Iain Anderson, Co-Founder and Executive Chairman of Cicero Group (moderator), Rachel Kent, HoF Financial Services at Hogan Lovells and Carolyn Fairbairn, Director General, CBI.

One of the biggest drivers for a finalisation of the Brexit Transitional Agreement is UK and EU businesses, the lack of a firm and reliable agreement and ‘Brexit Date’ is causing significant uncertainly for UK businesses and their EU counterparts. The agreement on the transition period is a welcome step forward and has bought time for firms planning for Brexit.

Talking about whether the latest agreement has gone far enough to help businesses plan for the future, Rachel Kent, says that the “Transition agreement is a pragmatic approach towards mitigating a hard Brexit, but without a legal precedent, firms with contingency planning should continue refining their plans”.

Protection of the UK’s Financial Sector, is a key concern for the UK government and the global financial service institutions that have chosen The City as home. When and how these businesses will need to fit into the new framework will be crucial to their long-term success and the reputation of UK Financial Services. One of the difficulties in coming to a final agreement seems to be that Brussels is asking for equivalence, which seems impractical for certain industries given the size and nature of the UK financial services sector.

Discussing whether the media spotlight the Brexit negotiations have had on them is affecting their progress and possibly the final outcome, Carolyn Fairbairn says “Negotiations are playing out in the press, that’s normal and will continue, however pragmatism is growing. “BDI (CBI counterpart in Germany) have been advocates for pragmatic transition and we speak with them every week.”

 What does the UK need to ensure they secure from the negotiations?

It has been clear since the start of the Brexit negotiations that the UK must ensure that it retains or can competitively attract the people, skills and talent needed to support UK competitiveness. The UK has many universities in the Top 100 global higher education institutions. Being able to seize the opportunities to compete through employment of well nurtured talent will be crucial to the UK’s continued success in the international markets.

The lack of Passporting Rights for UK financial services businesses has been a significant worry for the UK, however whilst “ The Prime Minister has ruled out passporting, it does not mean we can’t have frictionless trade. Obtaining a license to operate in one jurisdiction should make it easy to obtain a license in another.”, says Rachel

Businesses will need to get more creative in how they structure their businesses and partnerships to overcome some of the difficulties the final agreement will present.

The final Transition Agreement is yet to be finalised, many conversations with Brussels begin with ‘is there not a way you can avoid leaving’ but soon move onto practical planning. So whilst there are still many hurdles to overcome, businesses can take comfort now that a hard Brexit looks less likely, and that at least now they can start making more certain contingency planning easier for SMEs throughout Europe.

 

 

 

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