Could banking and accountancy be post-Brexit exports?

Brexit negotiations
By Eleanor O'Neill, CA Today

20 April 2017

With an uncertain future hanging in the balance, thoughts are turning toward the value of the services Britain will have to offer at a post-Brexit negotiation table.

The regulatory agreements which allow UK financial bodies to sell services across borders, a practice commonly known as 'passporting', is a particular sticking point if lost during negotiations. 

According to Shanker Singham, Chairman of the Legatum Institute's Special Trade Commission, banking, accounting and other financial services (FS) could be the country's biggest export opportunity in coming years.

He told The Economist that these industries would be key bargaining chips as they are already established as valuable assets that 'sell well'.

The FS and professional services sectors have been shoring up Brexit defences for some time. The Big Four, for example, began making plans as early as July 2016 in direct response to the referendum result. 

Contingencies ahead

Commenting on the future of FS and Brexit, James O’Riordan, Head of Financial Services at Deloitte, said: "Insurers, asset managers, domestic and wholesale banks will each be affected differently by Brexit.

"There is no one size fits all... This is a complex process and detail is everything. ‎

"Generally, there will be some movement of business and of people, though we don't expect this to happen in a substantive sense until next year. However, the triggering of Article 50 will mean financial services companies will step up their efforts and start acting on their contingency planning."

One of these contingencies is the suggested compromise of an 'enhanced equivalence' agreement should passporting be unattainable. This would allow firms in the UK and other non-EU countries to freely sell services to the 27 member nations, provided they have similar rules in place.

Opportunities outside of the EU are of course another option. Countries like China and India whose domestic FS offering is disproportionate to a growing middle class, and emerging economies like Indonesia, all hold major potential.

However, international services offerings can be a difficult pitch without historical partnerships or regulatory back-up. Politics can often come into play and while the likes of Australia and New Zealand may consider a trade-off with concessions in other areas, breaking Asia will likely prove a much harder sell.

Topics

  • Business
  • Brexit

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