Banking News

UK Business Rail Against “No Deal” Brexit

UK Business Rail Against “No Deal” Brexit

(27 July 2018 - United Kingdom) British corporates are becoming increasingly vocal about the dangers of a “no deal” Brexit outcome. Inc.’s UK head, Doug Gurr, stated that there could be “civil unrest” within two weeks if Britain leaves the European Union (EU) with no deal while Airbus warned that under “any scenario” Brexitwould have negative consequences and that it could pull out of the UK. Rolls-Royce CEO Warren East said that until the UK struck a Brexit deal with the EU, “we as a business cannot rely on anything in the white paper or anything government says”. BMW and Jaguar Land Rover also warned a ‘hard’ Brexit could prompt them to close factories in the UK. Business fears have intensified after publication of UK Prime Minister Theresa May’s ‘soft’ Brexit plan under which the UK and the EU would have a free trade area for goods but not services.

Following release of the UK government’s white paper two Eurosceptic cabinet ministers resigned in protest, citing a broad number of “unanswered questions”. PM May then backed legislative amendments that were intended to toughen up her Brexit plan but are likely to be unacceptable to EU leaders. The one outcome that mostbusiness lobby groups continue to oppose is a second referendum to resolve the Brexit turmoil once and for all. Many fear that another divisive vote would prolong the uncertainty that is already deterring investment.

Separately, Deutsche Bank has moved almost half its Euro clearing activities from London to Frankfurt in the latest sign of European cities winning financial business from the UK ahead of Brexit. The move has provided a significant boost to Deutsche Börse’s ambition to steal business from London after Britain leaves the EU next March. Theclearing of euro-denominated interest rate derivatives has become a key Brexit battleground for regulators, banks and exchanges. In the past, London’s LCH was the undisputed leader for clearing euro-denominated interest rate swaps, processing up to €1tn of notional deals per day. Germany’s largest lender does not disclose itsclearing volumes but it is one of the five largest clearers of interest derivatives.

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