According to ACCA Financial Services Sector is being Impacted by Uncertainty Surrounding Brexit Negotiations
According to a report released by ACCA on 24 May, 2017, the Uncertainty regarding the result of Brexit negotiations are affecting the ability of the global financial services to prepare, despite a significant number identifying and referencing the entire process as a risk rather than an opportunity with regards to their business.
As part of the research, a number of accountants employed in financial services organisations across the world, were asked about their opinion with regards to brexit and its implications on financial services. As per the research, 40% of the participants were of the opinion that Brexit is a rather than an opportunity. While, 16% of the participants were of the opinion that it seems more like an opportunity than a risk.
The report also highlighted that 25% of the participants either had no plans in place or were not clear with regards to what they should do with regards to Brexit. In addition to this, 32% of the participants were at initial stages with regards to planning life after Brexit. Insufficient and Inadequate communication by regulators and the government with regards to adopting the proposed approach in relation to Brexit was cited as one of the primary reason behind lack of preparation.
As per the research, the element of uncertainty surrounding the negotiations between the EU and UK in areas such as mutual recognition and equivalence and the potential of ‘hard Brexit’ were the major concerns shown by the respondents to the survey.
According to Chief Executive of ACCA, Helen Brand OBE, the financial services organisations have an important role to play in assisting other organisations with regards to navigating the complexities and challenges of Brexit but lack of communication on the subject matter from the decision-makers both in the EU and UK is having an effect on their ability to do so.
Helen Brand OBE also said that while all the discussions with regards to brexit has been focused a lot on the impact of it on the UK economy, the status of London as a global finance hub is significant as it means that the negotiations regarding Article 50 will have implications for financial services organisations across the world.
The financial services sector occupies a significant position in the economy of the United Kingdom. The sector currently employs almost 1.1 million people, earns annual revenues falling in the range of £190bn-£205bn and also generates an estimated amount of £60bn–£67bn in taxes annually.
The UK is the largest net exporter with regards to financial services in the world. The EU is the single biggest market for the UK with regards to financial services export. In the year 2015, 41% of the UK’s trade surplus in financial services was related to the EU market. Therefore the relationship between the UK and EU is very important for both the parties.
Helen Brand further added that as far as the negotiations are concerned, the situation is not like that in which a loss to London will automatically become a gain for the Europe, some businesses with global presence may be more inclined towards either relocating to somewhere else or simply reduce the scale of their European operation if the uncertainty continues. New York could benefit a lot if the current situation with regards to uncertainty continues.According to the Director of Professional Insights at ACCA, Maggie McGee, many financial services firms are either lacking in preparations or in the initial stages of planning and this mainly due to the lack of information provided by the decision-makers with regards to Brexit negotiations.