OPTIMISM FOR A ‘SOFT BREXIT’ DIMINISHING AMONGST FINANCIAL SECTOR LEADERS

Leaders of the UK’s leading FinTech and Prepaid financial services businesses are expecting a ‘hard’ Brexit that will diminish financial sector access to EU markets and adversely affect their businesses.

The research by the Prepaid International Forum (PIF), the not-for-profit trade body representing the prepaid financial services sector, includes input from 60% of its UK members.

Over half (58%) are now expecting a hard Brexit and the majority (66%) don’t believe that Theresa May will be able to hold on to the ‘financial passporting’ rights that allow UK approved businesses to provide financial services and products across the EU.

Nearly all of these leaders expected Brexit to be bad for their business (81%) and three quarters admitted that they are already looking at moving at least part of their operations out of the UK in order to minimise its negative impact.

Alastair Graham, spokesperson for PIF, says:

“Immediately after the Brexit vote, there was a general belief that common sense would prevail, and the reciprocal access to financial services between the UK and EU would remain open to the mutual benefit of both sides.

“However, as the negotiations have continued, this optimism has faded considerably. To the extent that now most are expecting and planning for the worst possible outcome for financial businesses.”

Ireland looks to be the most likely beneficiary for jobs and income exiting the UK, with 30% of leaders surveyed saying this would be the most likely country where they will relocate all or some of their operations.

Graham continues:

“The UK is a significant market for FinTech and Prepaid financial services and is the home of much of the EU’s innovation and growth for this sector. However, growing businesses cannot afford to become isolated from the opportunities across the EU. 

“The lack of clear signals from either side in the negotiation has seen optimism fade and companies are now actively preparing for the worst.

“Speaking to members for this research, it is clear that to maintain passporting rights most are planning to hold offices in both the UK and EU after Brexit, which for some will come at a significant cost.

“The destination of their main office is being determined by a range of factors, including access to expert staff, corporation tax, the cost of living and other expenditures.

“For these reasons, many are looking to relocate their main operations to countries where businesses can operate from a lower cost base than the UK. As well as Ireland, eastern Europe is emerging as a popular option, with Lithuania and Estonia mentioned, alongside options such as Ireland, Luxembourg and the Netherlands.”

Author: Yash Hirani

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