DAVOS, Switzerland — The CEOs of the world’s largest companies have been telling Isabelle Allen,
KPMG’s head of clients and markets that they are now accepting their fate that Britain is heading for a “hard Brexit.”
A “hard Brexit” is when Britain leaves the European Union without access to the single market but with full control over immigration instead.
Allen told Business Insider at the World Economic Forum in Davos that there are many geopolitical concerns for businesses but they are instead choosing to accept “hard Brexit” instead of becoming “paralysed.”
“It is interesting to see the view of businesses looking from outside, into the UK, as well as those who are within Britain,” said Allen, who is based in Paris, France but serves multinational clients globally.
“What has been difficult for everybody is the lack of visibility and May’s speech (on January 17) provided a roadmap, or a milestone, to how businesses can operate with more confidence.
“There has been a shift in sentiment and now CEOs are saying ‘this is my reality’ and ‘how can this new reality work for me because we know what we are going to deal with.’ Whether they agree or disagree on the issues is irrelevant. This is the new reality.”
“There is a lot of macroeconomic and geopolitical anxiety, such as US President Donald Trump, China, Brexit, elections in France, and if you add them all up there would be paralysis, if companies didn’t accept reality. There is also tech disruption to consider. But everyone that I’ve talked to the last few days have given a steely resolve.”
May signalled a hard stance on Brexit in her speech in London on January 17 but she offered an olive branch to her European counterparts attending the World Economic forum two days later: “We are all united in our belief that [the new] world is built on the foundations of free trade and globalisation.”
Meanwhile, on January 24, t
he Supreme Court ruled that the government must allow Parliament to vote on the triggering of Article 50.
The court’s head, Lord Neuberger confirmed that the Supreme Court’s judges voted 8-3 to reject the government’s appeal, and ruled that it must put the triggering of the article to a vote in Parliament before any formal action can be taken.
Two days later the UK government on Thursday published its “Brexit bill,” which paves the way for Britain’s exit from the EU. The bill, if passed, would give Prime Minister Theresa May the authorisation to trigger Article 50, starting the two-year negotiation period for Britain to leave the 28-nation bloc.
But the world’s biggest banks have been vocal already.
Banks are making contingency plans
The loss of passporting rights following Brexit is one of the biggest fears in the City of Londonand seems almost a certainty under May’s “Hard Brexit” plan.
If the passport is taken away, London could cease to be the most important financial centre in Europe, costing the UK thousands of jobs and billions in revenues.
Around 5,500 firms registered in the UK rely on the European Union’s passporting rights for the financial services sector, and they turn over about £9 billion in revenue.There has been a surge in applications for Irish passports following the UK’s vote to leave the European Union.
Barclays has apparently chosen Dublin, capital of the Republic of Ireland, as its headquarters within the European Union post-Brexit.
Barclays CEO Jes Staley already said earlier this month that operations will likely be shifted out of London as a result of the government’s hard stance on Brexit. He said that Barclays will move some jobs from the capital to either Ireland or Germany, where Barclays already has operations.
Elsewhere, Goldman Sachs is considering cutting its staffing numbers inLondon by up to 50% due to Brexit fears, according to a report on Thursday, while JP Morgan CEO Jamie Dimon said that more jobs than previously expected may have to be moved out of the UK as a result of Britain leaving the EU.
HSBC CEO Stuart Gulliver has said that Brexit will push bankers making 20% of London revenue to Europe.
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