How Is The UK Investment Sector Responding?
Given the high-rolling game of bluff poker that the Prime Minister is currently playing with Brussels, perhaps it isn’t surprising that so many institutions are hedging their bets by opening non-UK offices, which may become their EU headquarters, or then again they may not. They have shareholders to look out for, after all. But what is the UK fund management scene saying?
Again, I’m afraid, the arguments are highly nuanced, and they change all the time. Last November, as the December election was approaching, the Investment Association raised a few hackles by insisting that although the City’s future relationship with the EU should be “underpinned by regulatory co-operation”, the UK should still be open to creating its own completely independent rules in areas such as fintech or sustainable investment.
It was “not appropriate for the UK to be subject to rules which UK policymakers have not had a meaningful role in shaping,” the IA manifesto went on. Instead, the government should foster international competitiveness “through a modernised regulatory system with the joint aims of protecting consumers, and keeping the UK as the world’s most attractive location in business, tax and regulatory terms for international investment management”.
The day after the election, however, it was the IA that was coming under fire from prominent fund groups who declared that Mr Johnson should focus on maintaining close economic and investment ties to the EU, rather than going all out for the low-tax, lightly-regulated Singapore option. Richard Buxton, head of UK equities at Merian Global Investors, was quoted by the FT as rubbishing the Singapore idea, stressing that equivalence in regulatory standards was the key issue. Saker Nusseibeh, chief executive of Hermes Investment Management, reminded the government that the EU was “our most important market”, and that a strong relationship with Brussels was essential. And Patrick Thomson, the chief executive of JPMorgan Asset Management’s European, Middle East and African operations, reminded Mr Johnson darkly of the implications for employment and growth of diverging from EU norms and rules.
And the IA’s response? “We need to be clear-sighted about the fact that post-Brexit the UK will have to pay its way in the world”, said chief executive Chris Cummings. “Ours is not a plea for a bonfire of regulation, but a call for rules that are proportionate, cost-effective and fit for purpose in the 21st century.”
So there you are then, Boris. The experts have spoken. Take it away, it’s all yours, and good luck. But if you’re playing poker with Brussels, do remember that Brussels is playing a different, longer game. Chess.
