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Alexis Bledel, US actress, had a question to ask the world: “Oh, has anyone seen my husband?”
But that might as well have been the line she aimed at the City after the EU summit on Thursday, with its commitment to construct a backstop in the withdrawal agreement that would maintain the status quo until the end of 2021, and beyond.
Since the European Council meeting, there have been demands for Jeremy Corbyn, UK leader, to apologise for his role in the vote to leave the EU, and of businesses to keep calm. The most recent concern is the potential for a “hard Brexit”, in which the UK would lose the single market access it currently enjoys.
There is plenty of talk of hearing from the City’s top players. Yet, few seem to be listening.
A survey of the UK’s top 500 banks, insurers and asset managers by the BarCap wealth and asset management arm of Barclays said 24 per cent of respondents did not know how they could mitigate the risk of a hard Brexit.
Of those who expected to continue with current arrangements, 39 per cent also said the Brexit challenge could have been more expensive and a heavier workload.
It is not just businesses that are counting the cost of Brexit. Nearly half of respondents indicated that their contingency plans were negatively affected by a perceived lack of clarity about what is going to happen next. And almost a third revealed their contingency plans now have to adjust to a threat they do not see as being highly likely to materialise.
Phil Edmiston, chairman of Barclays Global Investors, said: “As is the case for so many, Brexit has affected our planning for the past two years. Coming out of the crisis, the banking sector was in flux as the regulatory environment evolved, and changes required to meet post-Crisis legacy issues created tremendous complexity.”
But Barclays, Barclays Global Investors and other financial institutions face an even bigger challenge with Brexit: uncertainty means a big risk.
Britain is a new, growing financial market and it is the customers — those on the continent — who are unhappy about the news. For example, a survey by the French firm Barclays Alphaville showed that more than 80 per cent of staff in the French financial industry disapprove of the process. In other words, there is no one directly benefiting from an exit from the EU.
Which makes the backstop — a commitment to keeping Britain in a customs union with the EU until the end of 2021 — a heavy deal for Britain. EU governments could take three decisions:
- they could refuse to consent to the backstop, and reintroduce the border between Northern Ireland and the Republic of Ireland.
- they could end the backstop immediately, before Britain leaves the EU, without any say in the decision.
- they could accept the backstop, and trigger its consequences immediately.
The UK government will not accept any of these options.
According to one senior UK source, the EU is merely putting on a show.
The lack of British progress in the negotiations, even after European Council president Donald Tusk, EU leader, gave them a month to resolve the issue, suggests all parties are keeping their cards close to their chest.
That leaves financial services companies worried about what will happen in March, the deadline set by the EU.
“Our biggest problem is the clarity on the whole [Brexit] situation,” said one banking source.
He adds: “If the end of the [UK] period is that we are one of the three nations left in a customs union and with the same rights as the EU, that would be a terrible thing.”
For all the talk about signing contracts with EU businesses, many bankers in the UK are still nervous.
So are already nervous companies. The BarCap survey reveals that an overwhelming majority of bankers and asset managers — 92 per cent and 94 per cent, respectively — say they would “consider moving business” if Brexit puts the UK at a competitive disadvantage.
But even as Brussels and Westminster engage in “Brexit theatre”, there is some encouragement for City businesses.
As is often the case, the unpredictability of the negotiation process has had a downside for UK-based customers.
In the first weeks after the referendum, Eurostat data showed Germany and the Netherlands’ economies were struggling. Yet their share of trade with the UK has held up and the impact of Brexit on those countries’ external trade looks to be fleeting.
While they look at this EU summit, customers in London and elsewhere are probably plotting a different route — to find people to be happy to work with.