UK fintech firm reaches for Ireland Brexit escape hatch A UK fin-tech firm will seek regulation in Ireland if the government doesn’t preserve financial services passporting rights in its EU exit talks. Regulation in Ireland would allow LMAX Exchange, which describes itself as “one of the UK’s fastest growing technology firms”, to keep doing business with other EU member states. …
So the LMAX disruptor has disrupted itself out of the UK.
That is not just Fintech, it is used quite heavily in network management and many other places which require message processing.
May has downplayed giving City firms any preferential treatment.
But May and her ministers are saying we will get the best deal possible with all the implications of that. Some ministers say we will keep passporting rights and the City will get preferential treatment, even that we will continue to pay the EU to have those.
I have lost track of who is saying what, who is contradicting others and even themselves, and the whole mess is buried under "brexit means brexit" and "we won't give a running commentary".
It is an absolute shambles and it doesn't seem things will improve any time soon.
Those running the financial hubs on mainland Europe are probably rubbing their hands in glee and pushing for the hardest possible Brexit.
The Chief Exec of the London stock exchange suggested that if we lose Euro Clearing, then that's likely to go to New York. There's existing infrastructure and economies of scale there, and bankers don't want to pay bonus taxes, possible financial transaction taxes and 70% top rates (even if the French are nicely inviting them to Paris). The US is allowed to do this under current rules, on regulatory equivalence (and we currently share the same laws as the EU). So it would be odd not to award it to us (but who knows how the negotiations will go).
Passporting is more complex, and I think we'll be less likely to get it - even though it would probably make sense to do the deal, the City must be seen to suffer to please the voters.
"The Chief Exec of the London stock exchange suggested that if we lose Euro Clearing, then that's likely to go to New York."
Because NY is member of the EU Single Market, right? Euro clearing is wholesale and can happen wherever people want to do business with each other. There's nothing the EU can do about that unless it wants to de-certify NY, HK, Singapore, Dubai, Beijing, etc, etc. That'll really work well for euro liquidity.
Why don't we just face it that "City bosses" including the Chief Exec of the London stock exchange are putting out a negotiating position to the gov't from their particular bit of rent-seekery. They've had it good and now have to sing for it. No sympathy here, but passporting & clearing certainly aren't the issue here.
Regulatory equivalence probably works in this sector. So far the EU has said that 10 countries have regulatory equivalence in various areas, and this will be covered by one of them. As we have the same lawas as the rest of the EU at the moment it would be perverse if they didn't grant us the same status as the US, Hong Kong, Singapore, Japan, Korea etc...
Although that's not to say that the Brexit negotiations won't become perverse, it depends on whether pragmatism wins out over rejection.
Passporting is apparently more important for banks, where you need a more active agreement in place, agreed in law, which therefore mustn't be too unpopular. Whereas equivalence is judged by the beaurocrats.
For some more info see: A European think tank - but a quite accessible piece
But May and her ministers are saying we will get the best deal possible with all the implications of that
Those of us who voted Brexit read this as best deal possible but not any deal at any price.
The banks are wriggling because they want their own way like they got in 2008 and then punished us for in bond trading. Not happening, nope. It's about time the UK stopped being beholden to the banks and hedge funds and here's our chance. It's not as if they're going to move to Germany anyway, or god forbid France and nobody else is even close to having the infrastructure they need and they can't all run back to New York.
A couple of banks pointed out after the vote that without passporting all they really need to do is have a division in an office on a side street somewhere like Brussels with 4 people in it and call that their division headquarters and they're good to go. Most banks have that anyway..
Once Article 50 has been triggered, Britain's exit from the EU would have to be negotiated within two years, a timeframe that can be extended only by unanimous agreement from the 27 remaining members of the European Council.
Should the UK be unable to reach an agreement with the EU within those two years and should at least one member of the council veto an extension of the negotiations, the UK would automatically exit the EU and all existing agreements, including those involving the single market, would cease to apply to the UK.
To summarise: as it's very unlikely that there would be unanimous agreement from the remaining EU countries (including regional parliaments), all intra EU trade & other agreements would not apply.
I believe, but can't remember where I read it, that at the end of the two years it is possible for the UK to decide not to go ahead if the deal is too terrible to live with.
Of course the political consequences of that at home could be even more terrible for the government making that decision - maybe that's why Parliament will be allowed a vote on the deal?
I did not write that there is a mechanism to revoke Article 50 once it is triggered. In fact, Britain would have to re-apply for membership of the EU, once Article 50 has been invoked, and possibly would have to wait for 2 years i.e. until Britain has actually left the EU. If Britain's application was accepted by the EU member countries, Britain would have to accept the Euro becoming its currency and being part of the Schengen area. Realistically, Britain would only re-apply to join the EU if there was total disaster.
Britain would have to re-apply for membership of the EU, once Article 50 has been invoked
That's not my reading of it - "If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49".
Invoking Article 50 only signals our intent to withdraw, we won't have withdrawn at that point. We will spend (up to) two years negotiating the terms of withdrawal.
http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-European-union-and-comments/title-6-final-provisions/137-article-50.html
"Article 50 is incredibly short and easy to read. I suggest you have a google and give it a read."
Seems like others have a different view
“there is nothing in Article 50 itself one way or another; it does not say
that you can retract or, once invoked, that you cannot retract. So it is left
to the lawyers to have those enjoyable disputes to sort it out.”
http://www.publications.parliament.uk/pa/ld201617/ldselect/ldconst/44/44.pdf
http://www.publications.parliament.uk/pa/ld201516/ldselect/ldeucom/138/13804.htm#_idTextAnchor008
So it's probably down to the lawyers.
How article 50 is interpreted is likely to be down the the Commission's lawyers. The CJEU is unlikely to overrule them - as it tends to take the party line on these kind of things.
So I think it's safe to say that if negotiations break down, we'll be out in 2 years.
There are a surprising number of politicians who seem to want the UK to stay in. But not to the extent that they actually want to do anything to make that happen. Other than perhaps trying to make leaving look too scary.
The Commission's lawyers also say that the Commission should lead on negotiating the UK's exit. Even though article 50 says it should be the Council of Ministers - so legal opinion can be nice and flexible. But I'd have thought that whatever happens will have to be approved by unanimous council vote. You can always find legal ways to do things the treaties say aren't legal, if there's the will. Otherwise the Euro would probably have already collapsed.
it's going to be difficult and probably need 3 treaties. A relatively easy one about leaving and how that'll work, an interim agreement to cover until, a final trade agreement.
I assume that May is talking much harder Brexit than she or the Chancellor probably want because that makes it less likely to end in blackmail and clock watching. Though the EU like last minute crisis agreements at 6am the day after the deadline expired.
Notice she's said there must be immigration controls and the CJEU isn't to be superior to UK courts. But she hasn't talked about budget payments, so I assume we'll offer a few billion a year in cash to get some of the stuff we want. Plus cooperation on things like space, universities, crime/terrorism - and probably structural funds to Eastern Europe, which can then be siphoned through the foreign aid budget, allowing her to cut that by stealth if she chooses. Or take it up to 1% of GDP for extra bragging rights...
The final trade agreement, or maybe they'll split it into many agreements, should take a few years.
They took 7 to negotiated the deal with Canada, and that looks to be in serious trouble now. And I imagine TTIP with the US is dead in the water, as Clinton has fallen out of love with it too.
...Or take it up to 1% of GDP for extra bragging rights...
So that's effectively a cut then given that the economy will probably tank.
(And, before somebody weighs in with "Oh there may be a few difficult years but then it will pick up", maybe that's true - but how long will it take to recover the ground lost in those "few" years?)
qwertyuiop,
Our exports to the EU were 60 of our trade in 2007. That's now down to 42%. That's not because we've suddenly become crap at exporting, it's because their economies have tanked due to the catastrophic folly that is the Euro.
We have a trade deficit with the EU. We have a trade surplus with the rest of the world. We are the second largest exporters of services in the world (after the US) and services don't tend to be affected by tarrifs. They are however affected by regulation - which coincidentally might be why the EU has been very happy to complete the single market in goods (in which we have a trade deficit) but not that in services (which despite that we still run a surplus with the EU).
So leaving the EU without a good agreement will be messy, and damage our economy. And theirs of course, which is why it's still worth hoping it won't happen.*
The Treasury report talking about large economic losses by 2030 assumes we'll sign no trade deals, leave on the worst terms and not improve things afterwards. I'd say all three of those assumption are bollocks, which is why that Treasury forecast is bollocks.
There will be an immediate cost to leaving. There might be some immediate upsides too, but that's harder to predict - seeing as we don't know what agreements we can make, or how fast.
*Doing the sane deal that helps everyone is of course what the Eurozone chose not to do in Greece. Instead getting the ECB to break the treaties and deliberately attempt to destroy the banking industry of one of its member states in order to pressure the government to fold in negotiations. That was the day I decided to vote leave. My reasons aren't really economic, but that I don't want to share majority voting on my laws with governments who are willing to do something that monumentally stupid, destructive, anti-democratic and immoral. There may be an economic cost, there's certainly risk, but the risk of remaining is equally high in my opinion.
This has been war-gamed several times and the outcome is always the same - that the UK won't get what people say we want in the respect that there's almost no value gained from negotiating. It is a useful buffer to get it's foreign affairs and trade negotiation teams up to scratch. My guess is the March triggering date stems from how long the government thinks it will take for that to happen and has nothing at all to do with actually negotiating a deal with the EU because there's no deal to negotiate. The EU's dealings with Canada are proof of this; so it'll be a repeal of the European Communities Act and Au Revoir, followed by one imagines a swift signing of a free trade deal with (amongst others) Canada.
Before Brexit:
"The City is too powerful. We need to rebalance the economy away from the City. Goldman Sachs is evil"
- The Guardian, BBC, academics etc for as long as I can remember.
After Brexit:
"The City is wonderful. We must do everything we can to keep the City happy. Especially Goldman Sachs. This is a disaster".
- The Guardian, BBC, academics now.
So either they didn't know what they were talking about, or they're just hyping every bit of bad news they can find.
@ Dr Stephen Jones
No kidding. We are all doomed now that there is 1% inflation even though the bank and gov have been desperate to get it back to the 'norm' 2-3% range. The previous BoE head King has commented a number of times that the doom of lower currency, inflation, reduced housing prices and so on are things we have been trying to do since the crash. Do enough of that and the BoE base rate can rise again as we need it to.
Also the idea that London can just get up and move to Europe (or would even want to) is amusing as the financial services population is bigger than some of their financial cities.
Personally, as someone who budgets quite prudently, I don't for one second believe the figures that inflation has been at 0.5% and has suddenly "rocketed" to 1%.
By my reckoning (i.e. my living expenses), inflation in the last decade has been running at more like 4-5% in the UK. Cost of what I'd call the essentials of food, accommodation, fuel and travel have all gone up way beyond inflation here. Given wages that have barely kept track with what I feel is a ludicrous figure of 0.5% inflation, I certainly feel much poorer than I did 5 years ago.
Unfortunately house prices are not covered by CPI (the Consumer Price Index) our chosen inflation measure. This makes it a pretty useless measure for dealing with the recent rise in house prices, and is a good reason why wages have fallen against real living expenses for at least 15-20 years.
However the inflation rate is rigorously measured when it comes to consumer goods. They do lots of very expensive research on what people buy, what proportion of their income they spend on it, and what has happened to costs. People are subject to confirmation bias. They remember the price rises that annoy them, but forget when things get cheaper. So unless you keep actual data of the things you spend your money on, and what they cost, I'm going believe professional statisticians figures over what you "feel".
I hope we don’t have to relocate some of our technology hub to Ireland."
I did and I wish to God that I had been able to stay there. There's a lot of very experienced and skilled people there; you don't have the likes of Dell and Apple about without picking up a few points on the IT business.
Other than a few minor differences like road speeds in KM/H it's much like living in the UK. The people make a difference though. Warm, friendly and generally laid-back. The Guinness tastes better too somehow.
I miss the place.
Concurrency libs in Java?
Hah. The C++ ones are far better. Boost, Qt... Heck, even the raw stuff in C++11 and 14.
The exact details of threads and/or forking is OS-specific of course, but the libraries handle that quite nicely.
It's not really concurrency if everything has to stop for the garbage collector.
Rather than pose as poor done-by Remoaners, LMAX, worst case, by its own description, could continue to do most of what it does right where it does. If it gets kicked out in the Fintech cold they need an office, registered address, a couple of IT bods and a few datafeeds in Ireland for compliance, with the bulk of the staff and ops right where they are today. Java can be hacked anywhere and systems tested, deployed, modded from wherever. None of that actually has to happen from Dublin. Besides there will be all that wholesale stuff to Fintech up still going on here the day after Art50 and the day after Brexit just like today. None of that will change as deep/wide capital markets, legal systems and clusters of know-how don't up stakes just because the EU puts up barriers. Much the opposite, actually.
"1. Monetary stability. The devaluations and revaluations of national currencies that were a feature in the 1970s and 80s were initially replaced with greater stability, removing the planning problems that came with changes in the value of currencies.
2. There is greater convenience for travellers. Instead of having to change currencies when crossing borders, travellers now use the same currency wherever they go in the eurozone. This has the added psychological benefit of making them more aware of being part of the common enterprise of integration, and makes foreign visitors more aware of the EU; they may not always understand the latter, but they cannot ignore the effect of the euro in their pocket.
3. There is greater price transparency, allowing consumers to more easily compare prices across borders.
4. There are fewer bureaucratic barriers to the transfer of large sums of money across borders, saving transaction costs.
5. The euro is now a world-class currency in the same league as the US dollar and the Japanese yen, providing the eurozone with a political tool that allows it to have greater international influence."
From "Understanding the European Union" by John McCormick. Of course the Euro brings its own problems but it is for a good reason: "the understanding that few barriers to the single market were as fundamental as the existence of multiple currencies with fluctuating exchange rates".
When Greece adopted the Euro, suddenly politicians could borrow money much more cheaply, so they bought votes with, for instance, Europe's most generous pension scheme. When that hit the buffers as it surely would, those politicans then left the mess to the opposition. Of course perhaps that should have been anticipated more by the designers of the Euro, but is it fair to say that's not really their fault? More the fault of capricious politicians in Greece?
Now that Alex Tsprias has made "excellent" progress towards making Greece a well-run country, Greece is continuing to be helped by the EU, and Greece is just beginning to improve...
Oh dear, oh dear, oh dear.
Not that I'm disputing all the good points about the Euro. It certainly can make life more convenient. However there are a few (frankly enormous) caveats.
Exchange rates are actually really important. Vitally so. They're the rebalancing mechanism that allows countries who are doing badly in trade terms to recover, relatively painlessly. Sure the drop in sterling costs every UK person money, but only on the component of prices that relates to imports. This also makes exports more competitve. Giving both a way to earn more foreign currency, and an incentive to substitue imports for locally produced goods. When a certain amount of that happens then the UK consumers' demand for foreign currency will drop, demand for sterling will rise (as more exports are being sold to foreigners who need pounds to pay for them) and so sterling will recover. Thus currency is acting as both a buffer to cushion the effect of economic shocks - and a push towards equilibrium, as unsustainable levels of exports or imports will be corrected by natural currency movements.
The alternative to this if your economy has become uncompetitive is wage cuts. But employees don't like wage cuts. In the Great Depression in the US, which started in 1929 - wages didn't seriously drop until 1932-33. Unemployment rose massively, but those in work were still unwilling to take cuts, even if there were no rises on offer.
The Eurozone does not have the natural balancing mechanism of currency movement. However the architects of the Euro knew that there was an alternative. What other monetary unions (say the UK and US do) - which is large transfers between regions of government money. Wealthier regions are taxed more, and that cash goes to the poorer ones, and helps to cushion asymetric shocks - where currency movement can't take the strain within a single currency area. This is the theory of optimum currency areas. The US Federal budget is something like 20% of GDP - or government spending per head in Scotland is something like 20% higher than it is in England.
However the EU budget is only 1% of GDP, and although a chunk of this is structural/regional spending to help the poorer regions of the EU - a third of it is still spent on agricultural subsidies - mostly to the richer bits of the EU.
In order to make the Eurozone work, the Commission budget would need to be at least 10x higher than it currently is (probably 15x-20x), and much of it be spent in the poorer bits that pay less tax.
At the moment there are none of the tools to currect the current Eurozone imbalances, which is why Greece has actually suffered worse than Germany and the USA did in the Great Depression of the 1930s.
Your comments on Greece are a sick joke. And only ignorance makes them forgiveable. The Euro has been an even bigger disaster for the Greek economy than the Greek government - which is saying something! And the response from the Eurozone has been vindictive, sanctimonous, dishonest, cruel and worst, fucking stupid!
Which is why the IMF prediction is that Greek unemployment will only fall below 10% (from its current 25%) in 2040!!!!
Italy's economy is now smaller than it was when it entered the Euro, even though they've been reasonably prudent, and avoided huge government deficits. Finland has been much better managed, but unable to use their currency buffer when hit by economic shocks, they've been in recession for 8 years. The comparable Swedish economy, which recovered very similarly from the 90s recession is well out of it now, as they weren't foolish enough to join the Euro.
The Euro has been a total disaster. And will continue to be so until it is either unwound or fixed - and by fixed that means common bank stabilisation funds plus common government debt and/or spending.
Oh and Greece didn't have all that generous a pension system before the crash (although too generous for its economy), and on average Greeks worked longer hours than Germans and retired later than them. Despite the lurid headlines in the press. They just weren't as efficient, productive or well governed.
The textbook I referred to earlier says, "Opinion has been mixed on the benefits and costs of the euro. It is probably safe to say that no one chapter in the history of European integration was approached with so much trepidation, and yet has also had so much global impact and (thanks to the economic downturn of 2007-10) caused so much public consternation and so many political headaches."
The adoption of the euro is described as a "gamble" by John McCormick. Nowhere does McCormick go so far as to describe the euro as a "folly". Instead, he wrote, "Never before has a group of sovereign states with a long history of independence combined their currencies on a similar scale, and the risks were significantly greater than those involved in completing the single market. Furthermore, the key preparatory decisions were taken by national leaders with little or no regard for public opinion, which was often hostile to the idea, and uncertain about the implications."
The book goes on to list four of the downsides of the Euro and may I recommend buying the book because I have found it useful. "States have different economic cycles, and separate currencies allow them to devalue, borrow, adjust interest rates and take other measures... Such flexibility is no longer available to eurozone states. In short, the members of the eurozone must rise or fall together".
As for the points about Greece. I have been told by someone with an OBE for services to Save the Children fund who loves Greece and has been there every year for the past 40 years, Greece has been helped by the EU. McCormick writes that Greece "had been borrowing heavily since switching to the euro, had been hiding its true financial situation, and found itself weak and exposed". I added above the reason I have heard why Greece had been "borrowing heavily" and is it fair to say that isn't so much the fault of the euro itself?
At the end of the chapter, McCormick does not judge the euro, simply asking, "Would the adoption of the euro prove to be a disruptive step too far, or one of the most far-sighted and creative decisions ever taken by Europe's leaders?" The single market is described as a success, "it has helped create new wealth and opportunity, has brought down many of the economic barriers that have for decades divided Europeans, and has paved the way for the creation of trans-European economic ties that have reduced national differences and promoted the idea of Europe as a powerful new actor on the world stage."
According to Moneta International UAB statistics, the cash UK fintech companies rose by 18 percent to $3.3bn. It is due to the fact that private equity investment climbed by 57 percent to $1.6bn, while venture capital dropped to $1.7bn. The UK fintech sector is entering a new path of development ahead of its peers in Europe.
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