You are here

May's ministers rush to smooth bankers' ruffled Brexit feathers

Friday, October 21, 2016 - 07:53

davis.jpg
Prime Minister Theresa May's government is seeking to quell fears among bankers that it won't fight for the finance industry as it prepares to pull Britain out of the European Union.

[LONDON] Prime Minister Theresa May's government is seeking to quell fears among bankers that it won't fight for the finance industry as it prepares to pull Britain out of the European Union.

Brexit Secretary David Davis said Thursday that he is "determined to get the best possible deal" for London-based banks after privately clashing with Chancellor of the Exchequer Philip Hammond over how to balance the conflicting goals of curbing immigration and accessing the single market.

Meantime, Trade Secretary Liam Fox is planning to meet finance executives to soothe their concerns over Britain's future relationship with the bloc, according to an official who spoke on condition of anonymity.

The two-fronted charm offensive by top-ranking government figures who campaigned for Brexit aims to soften the perception of Mrs May's first 100 days in office that she is ready to sacrifice Britain's role as a global financial hub to cut back on immigration. 

sentifi.com

Market voices on:

Mrs May's office has ordered a leak inquiry after briefings against the chancellor appeared in newspapers last week, an official said. 

"Everyone realises that financial services is a key part for the Brexit negotiations," Anthony Browne, chief executive officer of the British Bankers' Association, told Bloomberg Television on Thursday.

"If you're going to make a success of Brexit, part of that is making sure we continue as a financial services centre for Europe."

Until now, Mr Hammond was repeatedly left to promote the cause of the City of London virtually alone as Mrs May, Mr Davis and Mr Fox instead signalled their priority was reducing the flow of labour into the UK rather than safeguarding trade.

Bankers took that to mean the UK would be shut out of the single market, forcing them to consider moving workers and operations overseas. Restricted access means UK financial firms could lose as much as 40 billion pounds (S$66.56 billion) in revenue and put 70,000 jobs at risk, according to consulting firm Oliver Wyman.

After newspapers speculated the chancellor may quit - and his people moved quickly to deny it - there is an effort to show a united front.

Mr Hammond came out to say he was at the heart of Brexit planning while Treasury officials say Mrs May's office is now working more closely with them to ensure coordination about the government's economic message.

After her office expressed "full-confidence" in Mr Hammond on Monday, pro-Brexit ministers who had previously voiced differing views on the importance of financial services are now lending Mr Hammond some support in defending his line that the City remains a "high priority".

"We have to treat as absolutely central to what we do maintaining the stability of both the City but also the European financial markets," Mr Davis said on Thursday at the House of Commons.

"The European financial markets are a little fragile over the last few years."

This marks a shift in tone from when Mrs May outlined her Brexit vision at the Conservative Party's conference earlier this month. 

Back then, she gave the strong impression that banks would get no special favours in the Brexit negotiations as she savaged the rich "international elites" who have gained at the expense of ordinary people.

As well as alienating the world of finance, such rhetoric also pushed the pound to a three-decade low and her criticism of loose monetary policy led to a public slap-down by Bank of England Governor Mark Carney who said the independent central bank won't "take instruction" from politicians.

The shared approach will be a relief to Mr Hammond, who flew to New York straight after Mrs May's closing Tory conference speech in what became a damage-control mission to reassure US bank chiefs.

He then moved on to the International Monetary Fund's annual conference in Washington, where Mrs May's attack on globalisation dominated the conversation on the sidelines.

Still, it remains to be seen in which direction Mrs May will steer the ship. She's made it clear the government will not reveal its negotiating position ahead of talks set to begin by the end of March. This means that, for now, the UK's future in the single market must remain something of a mystery.

BLOOMBERG

Nespresso
Pair your daily business read with the perfect cup of espresso.

Subscribe to The Business Times today to receive your very own Nespresso Inissia coffee machine worth $188.

Find out more at btsub.sg/btdeal

Powered by GET.comGetCom