Financial Mail

A painful separation

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was lucky enough to be hosted by large asset manager Schroders at its London head office last week. I have not seen such a smooth, profession­al presentati­on since the peak of the Fidelity marketing machine 15 years ago. All that was missing was the praise singing by veteran Stanlib marketer Paul Hansen.

Many of the presentati­ons consisted of softball interviews by members of the Schroders communicat­ions department. No journalist­s or other third parties were allowed on stage.

We were, however, given the opportunit­y to conduct interviews with senior members of the team away from the PR candy floss. I met the senior European economist Azad Zangana to get some honest opinions on Brexit.

One practical effect will be that EU citizens who want to work in London will need visas, and Britons will need them to work on the continent — though short tourist and business trips should remain visa free. British taxpayers will pay £40bn in the divorce, and might even have to pay more in future.

The rather glib view by Schroders CEO Peter Harrison was that Schroders is already a multinatio­nal, and he can’t see it having much effect on either its original UK business (which is shrinking in relative terms anyway) or its large continenta­l European one. It has about a 5% market share in both regions, and expects much future growth from the US, where its share is just 0.5%, or in new markets such as SA.

Zangana says Brexit isn’t going to be easy for anyone. It might seem to be coming to a conclusion, as a 585-page “divorce agreement” was published last week. But this still has to get through not just the British parliament but the European one and the national legislatur­es of all 27 other EU countries. People are wondering if UK Prime Minister

ITheresa May’s deal is preferable to cutting ties altogether — the no-deal Brexit.

Zangana says with this option the UK would have a similar relationsh­ip to the EU as SA. It would allow the UK to engage in its own trade negotiatio­ns and exit EU labour and environmen­tal laws.

One big winner

Under the current deal the customs union will stay in place until 2021, but for nearly two years of transition the House of Commons will have no say in trade policy. Zangana says the big winner will be Northern Ireland, which will be part of the UK but have an invisible border with the Republic of Ireland and the EU. Some companies that were considerin­g relocating to Dublin are looking at office space in Belfast.

There will be no customs checks on the border, but the EU reserves the right to do “regulatory checks” on the Irish Sea. It is not clear what this might mean. Maybe people carrying unregu- lated funds on ferries can be fined.

Schroders expects the UK to grow marginally faster than the eurozone,

1.7% compared with 1.3% a year over the next 10 years. For one, the population in the UK is still growing, while it is shrinking in Germany and Italy.

Recently the prospect of a second Brexit referendum has become serious. More than 670,000 people marched for a second vote in October. The Brexit deal bears little resemblanc­e to the bestof-all-worlds chief Leave campaigner Boris Johnson promised. And building a UK-EU free-trade treaty could take many years. So far there are just a few platitudes in a political declaratio­n which promises a future free-trade deal.

Many people used their vote in the Brexit referendum as a vote against the political establishm­ent, and did not look through the complexity of leaving the EU.

It is still not too late for Britons to change their minds.

Building a UK-EU freetrade treaty could take manyyears. So far there are just afew platitudes in a political declaratio­n

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