UK finance leaders getting gloomier about Brexit as banking bosses hint time may have passed to stop exodus

The ICAS Brexit Tracker, produced in association with law firm Brodies LLP, shows that the membership’s views of the effect so far, and the likely outcome once the UK leaves the EU, have become slightly more negative in the past three months, since Article 50 was triggered.

The findings come as top executives at five of the largest banks have said a staggered deal on leaving the European Union is only likely to be agreed late on in talks with Brussels, meaning they have already begun relocating staff.

News agency Reuters has reported that the disclosures mean the UK government may have left it too late to convince major banks that it can strike a deal to soften the impact of Brexit before they start shifting jobs from London.

“The timeframe for when we wanted a transitional deal has already passed,” an executive at one global bank if quoted as telling the outlet.

James Palmer, a senior partner at law firm Herbert Smith Freehills, told Reuter that many banks have accelerated plans to relocate parts of their businesses after the inconclusive results of last month’s general election because it has increased the likelihood that Britain walks away without a deal.

“Therefore getting a transition committed now is absolutely fundamental,” Palmer said, adding that if politicians did not take this on board they “will have failed, and will have failure on their tombstones as their legacies”.

Meanwhile, the ICAS tracker, which charts a range of responses from -50 (very negative) to +50 (very positive), found that on average the sentiment regarding the experience of Brexit so far was slightly more negative (-9, compared with -6 in March, a fall of 7 per cent in optimism). Expectations regarding the likely impact of Brexit on the individual and their organisation, once the UK has left the EU, were also more gloomy (-14, compared with -10 in March, a fall of 10 per cent in optimism); and for the likely impact on the UK economy as a whole, even more so (-16 compared with -13 in March, a fall of 13 per cent in optimism).

The ICAS Brexit Tracker for Summer 2017 is the second in a series of quarterly online polls assessing the degree of optimism (or otherwise) of ICAS members regarding the impact of the Brexit process so far, and the likely impact of the UK leaving the EU.

This, the second survey in the series, was carried out through May/June this year, including much of the general election campaign (but not the result of the election), and is based on responses from more than 530 chartered accountants (CAs) across a range of sectors.

Mike McKeon CA, chair of the ICAS Brexit Advisory Group, said: “The survey reflects the fact that time is running on and we are still not getting any clear view of what the outcome of the Brexit negotiations will be. Governments have still not provided a detailed picture, so there is uncertainty.”

In terms of the outcome of the Brexit talks:

The survey asked: “how are your colleagues reacting to Brexit”, focusing on those who are either UK nationals elsewhere in the EU, or EU nationals in the UK.

Colleagues who are EU nationals, in the UK

Considering relocation 36 per cent

Considering UK citizenship 32 per cent

Seeking legal advice (self funded) 11 per cent

Seeking legal advice (employer funded) 10 per cent

Colleagues who are UK nationals, in the rest of the EU

Considering relocation 45 per cent

Considering EU citizenship 40 per cent

Seeking legal advice (self funded) 13 per cent

Seeking legal advice (employer funded) 13 per cent

The figures suggest that uncertainty is already sparking action, with more than four in 10 reporting that some of their British colleagues based elsewhere in the EU are considering relocation.

Christine O’Neill, chairman of Brodies LLP, said: “We have known from the day after the referendum result that citizenship rights, including rights to work and live in the UK and in the rest of the EU, would be an area of very real concern for businesses and of course for affected individuals and their families. Lack of political agreement on the position of EU nationals in the UK (and vice versa) appears to be leading individuals to take action to make their own situation more secure.”

The survey also asked ICAS members whether different parts of the UK should apply different policies as regards trade (relationship with the EU Single Market) and migration. The answer was a definitive “no” for both trade (70 per cent) and migration (68 per cent).

There was no significant difference between members in Scotland (55 per cent of responses) and elsewhere.