City joins calls for ‘urgent’ Brexit transition deal

Relocation of banks and other financial firms has again been highlighted. The City of London Corporation joined calls from business organisations that argue firms may initiate plans to move by January.

UK government urged to come to transitional Brexit deal
The City of London Corporation has become the latest body to warn the government that, unless a Brexit transitional deal is arrived at soon, banks and other financial firms will start relocating from the capital to other European cities.

Numbers of groups calling for Brexit transitional deal growing

The warning comes on the heels of similar requests from the lobby group theCityUK and Britain’s five leading business organisations, which said the need for a transitional deal was urgently needed if jobs and investment were not to suffer.In a letter to Chancellor of the Exchequer Philip Hammond, Catherine McGuinness, the corporation’s policy and resources chairman, said it was now “critical” that UK-based financial services firms had clarity on “time-limited, legally binding transitional arrangements” as well as the principles that would underpin them.If this could happen by the start of the New Year, Ms McGuinness said the many banks and financial service firms who had drawn up contingency plans to relocate their European hubs could put those plans on hold or even scrap them completely.“While businesses will have different cut-off points for activating contingency plans, clarity will be needed by the end of this year,” she wrote. “For businesses that have already begun activating contingency plans, clarity on transition will allow them to decelerate those plans.“For others, it may help them avoid taking unnecessary contingency measures entirely. The earlier transitional arrangements are agreed, the more value they will have for businesses and their customers.”

Relocation warnings by Germany’s financial regulator

The letter follows a call from Felix Hufeld, head of Germany’s financial regulator BaFin, for banks to speed up their relocation plans or face the possibility of their not being able to continue to serve EU customers after the UK leaves the bloc in March 2019.Speaking at a financial services conference in London on Tuesday, Mr Hufeld said that it would be difficult for UK-based banks to sort out new, European hubs if Britain fails to strike a transitional deal by the first quarter of 2018. “Have we already hit a point of no return? I don’t think so,” he said. “But we’re getting closer.”A spokesman at the Treasury in London said, “The Chancellor has made it clear that it is his priority to ensure the UK remains the financial services centre of the world and it is neither in the UK nor EU’s interests for there to be a cliff-edge for business or a threat to financial stability.“We are working closely with our partners in Europe to negotiate a mutually beneficial transitional arrangement which avoids unnecessary disruption, and allows businesses in the UK and EU to adjust in an orderly way to the new arrangements after Britain leaves the EU.”
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Ms McGuinness’s letter also called on Mr Hammond to include in his Budget next month a tax cut to reduce the 17 per cent rate for corporate treasury centres, which are popular among Asian multinationals and operate as in-house banks for their businesses.The City of London Corporation wants to make the UK rate competitive and “allow London to win more business from Asian rivals” including Singapore and Hong Kong, who tax at eight and 8.25 per cent respectively.Ms McGuinness said the proposal was part of a broader call to action on fiscal policy, which “must go beyond Brexit considerations”.For related news and features, visit our Brexit section.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Global Mobility Toolkit download factsheets resource centreAccess hundreds of global services and suppliers in our Online DirectoryClick to get to the Relocate Global Online Directory