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Brexit jitters in City will see us all suffer

by Nicola Horlick | 05.06.2018

Nicola Horlick is founder and chief executive of Money&Co., a marketplace lending business focusing on business loans.

The clock is still ticking down to March 2019, and we still have no idea what Brexit will really look like. For all businesses, this is making it extremely difficult to plan ahead. Increasingly, business leaders are being pushed into making decisions that will ensure that they will still have access to the single market, whatever the final outcome.

In financial services, there has been much chatter about passporting, equivalence and a general assumption that the City will still have access to the rest of Europe post Brexit. And yet, anyone who has bothered to listen to Michel Barnier’s statements about financial services should realise that it is highly unlikely that the City will have unfettered access to the eurozone in future.

Within my own business, we have been discussing setting up a fund structure for a new investor. Prior to 2016, the structure would have been set up in the UK, but now it will be domiciled in Dublin. Instead of a UK custodian, we will be using a Dublin-based custodian. Instead of a UK firm of lawyers, we will be using a Dublin-based legal firm and we will be using the Dublin office of whichever accountancy firm we decide to work with rather than the London office.

This clearly has negative implications for London. Revenues that would have been earned here will now go to Dublin. Jobs that should stay here will disappear as others in the fund management industry launch funds in Dublin or Luxembourg in order to be sure that they can distribute their product in the EU.

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Very prominent voices in the financial services world, such as George Soros and Goldman Sachs CEO Lloyd Blankfein, have tried to point out the folly of leaving the EU. They are urging the British people to think again.

It is easy to forget what a parlous state the UK economy was in during the 1970s. My generation witnessed the remarkable transformation that followed, and one of the key drivers was the emergence of London as the world’s pre-eminent centre for financial services. Our industrial heartlands collapsed. The cotton mills and chemical plants closed and our brightest minds flocked to the City and took on the Americans.

I can understand the resentment that many in the North of England feel towards the City and “bankers”, but there is no doubt in my mind that the UK would have been relegated to a second-tier economy if we had not embraced financial services with both hands and run with the ball in the 1980s and 1990s.

The economic future of Britain is again under threat and I continue to believe that we must fight to stop Brexit if we are to preserve and increase our prosperity. Rather than seeing Blankfein and Soros as mega-rich Americans who have made money at the expense of the ordinary man on the street, we should listen to their pleadings. After all, they are unlikely to suffer overall as a result of London’s depleted role in financial services. We will be the ones that will suffer.

Edited by Luke Lythgoe

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