UK banks fear politi­cians set against them on Brexit

Kuwait Times - - BUSINESS -

LON­DON: For decades, Bri­tain’s bankers have re­lied on their in­dus­try’s out­sized sta­tus in the econ­omy to find a re­cep­tive ear in govern­ment. But in the af­ter­math of the coun­try’s vote to leave the Euro­pean Union, the sec­tor that gen­er­ates about a tenth of na­tional eco­nomic out­put is grap­pling with an un­com­fort­able new re­al­ity where eco­nom­ics doesn’t al­ways trump pol­i­tics.

June’s vote to quit the EU has trig­gered a change in lead­er­ship and tone in the Bri­tish govern­ment with new Prime Min­is­ter Theresa pledg­ing an in­dus­trial re­vival and to build “an econ­omy that works for ev­ery­one” - set­ting nerves jan­gling in the City of Lon­don global fi­nan­cial hub.

Reuters spoke to sev­eral se­nior bankers from big Bri­tish and in­ter­na­tional banks based in the city, in­clud­ing some in­volved in dis­cus­sions with the govern­ment over Brexit. Many said their warn­ings about the im­pact of a so­called hard Brexit - where they lose their ac­cess to the Euro­pean sin­gle mar­ket - were be­ing met with scep­ti­cism by the govern­ment and ac­cu­sa­tions from some eu­roscep­tic law­mak­ers that they were un­der­min­ing the mes­sage that Bri­tain can thrive out­side the EU.

“It’s al­most as if we were back in the 1940s and we were look­ing for fifth colum­nists all over the place be­cause peo­ple are trying to do Bri­tain down,” said Ron­ald Kent of the Bri­tish Bankers’ As­so­ci­a­tion (BBA). The term “fifth col­umn” refers to a group of peo­ple that acts se­cretly against the state to as­sist an ex­ter­nal en­emy. The head of the BBA, An­thony Browne, said on Sun­day that the pub­lic and po­lit­i­cal de­bate was “tak­ing us in the wrong di­rec­tion” and that big in­ter­na­tional banks were pre­par­ing to move some op­er­a­tions out of Bri­tain in early 2017.

The govern­ment has pledged to ex­e­cute Brexit fol­low­ing a vote to leave the Euro­pean Union that was driven in part by a de­sire to curb im­mi­gra­tion and was re­garded as a re­pu­di­a­tion of a Lon­don elite, in­clud­ing a bank­ing sec­tor still the sub­ject of lin­ger­ing pub­lic anger over its role in the fi­nan­cial cri­sis.

While fi­nance min­is­ter Philip Ham­mond and his min­is­te­rial col­leagues have been keen to as­sert the fi­nan­cial in­dus­try is of great im­por­tance, of­fi­cials say pri­vately the Brexit deal will have to work for the coun­try as a whole and means the bank­ing in­dus­try can­not ex­pect spe­cial treat­ment.

“There is no ques­tion of pri­or­i­tiz­ing the fi­nan­cial sec­tor, or any other sec­tor in those talks - it’s not fair to talk in terms of spe­cial cases,” said one source with knowl­edge of the govern­ment’s ap­proach to the ne­go­ti­a­tions with Brussels. The fi­nance min­istry re­ferred a re­quest for comment for this story to re­marks made by Ham­mond to a par­lia­men­tary com­mit­tee last week. He said ad­dress­ing the Brexit chal­lenges faced by the fi­nan­cial in­dus­try was a very high pri­or­ity for the govern­ment. —Reuters

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