Brexit and the Financial Services Industry
Before the end of 2020, the UK and the European Union successfully conquered the Trade and Cooperation Agreement. Although this is a major milestone in our effort to split from the EU, Brexit has left us with several issues that we need to be concerned with, particularly in the financial services sector, a sector of which if impacted negatively, can lead to significant ramifications to our country, as well as the EU.
Although goods will continue to move freely across the two territories, Brexit has made the free movement of people a major concern as the pan-European passport is no longer applicable when entering the UK. For businesses, acquiring skilled workers from the EU can pose a challenge while sending workers to the EU or opening an enterprise will also require a bit of work by acquiring the necessary authorisations and permits to enter.
In the light of recent developments, Malta may serve as an alternative choice for financial service companies operating in the UK if they wish to cater to the EU financial market. Although Malta is under the European jurisdiction and has proved to be a favourable location for UK enterprises due to its strong financial services management, specifically in connection to insurance, banking, investment and other firms. Another incentive for investing in Malta is its attractive tax systems.
Now that previous agreements will be covered by the Trade and Cooperation Agreement, we should look forward to adjusting our enterprises to suit the latest deal. For the past decades, we have become the leading hub for investing, trading and lending and this is likely to continue post-Brexit. However, we can expect a change in our influence as a financial powerhouse in the EU.
Included in the deal is the continuation of tariff-free exchange of goods and services between the two territories. However, both sides are looking forward to negotiating particular terms about the financial and legal services on a separate occasion. This will create a continuing opportunity for UK enterprises to trade within the EU, along with support from UK skilled workers. The agreement also includes clauses with pioneering provisions on legal services which will allow our lawyers to help clients across the two territories, except in areas where EU members place limits on this clause.
As of the start of 2021, financial institutions based in the UK will automatically lose their access to the EU market. If they wish to serve clients from the EU, they have to get specific authorisation. However, this authorisation can be withdrawn at a moment’s notice. To address this issue, the EU has granted temporary permits for UK enterprises to encourage them to settle deals with buyers and sellers as soon as possible. With UK financial institutions managing trillions worth of assets, this could take a considerable amount of time. Both sides are now thinking of ways to settle this issue in anticipation of how business deals will be done in the future.
As to how Brexit will impact the financial services industry, nothing certain can be said as of the moment, although the deal could probably make an amicable accord between the regulators and politicians on both territories. In anticipation for the implementation of EU equivalence permits, financial enterprises based in the UK are urging EU regulators to grant them permits which will allow them to seamlessly continue their business after Brexit.
In anticipation for Brexit, several banks and fund managers have transferred trillions worth of assets from the UK to the EU, with more than 8,000 jobs leaving us as well. In an effort to fill the job market, various enterprises are planning to hire individuals from the EU, with Amsterdam, Paris, Frankfurt, Luxembourg and Dublin benefiting this trend.
What will happen now? Only one thing is for sure: the future of the European market will be shaped by the decisions that bankers, regulators and politicians will agree in the near future. For the UK, aligning with the EU market rules could allow businesses to continue with their usual path while striking it out could mean changing the target market to include the global market. Various institutions have different preferences: others prefer to stick with the EU market while others prefer branching out to a different and new market.
If you are unsure how Brexit will ultimately impact your business in the future, you can consult with Nigel B. Butler to help you set business goals and action plans that will put you where you want to be. Business growth is only possible if stumbling blocks can be addressed as soon as possible, along with business systems, customer service systems and marketing strategies put into place to let your enterprise grow seamlessly.
Why trust us? Aside from business growth, we also offer bookkeeping, accounting, payroll, tax returns, and VAT returns. We also have a long list of clients that come from various industries including construction, design and marketing, information technology, manufacturing, professional services, property rental and development, retail and transport among others.
To give the best possible service for our clients, we look to our philosophy to provide an efficient, friendly and courteous service that exceeds expectations. We will also listen to whatever you need to say and communicate with them in a clear and appropriate manner. We will also present a transparent billing system that will never surprise you. At all times, we will be honest, upfront and truthful and we will aim to let you pay the least amount of tax that is possible. You can always count on Nigel B. Butler to provide pro-active and sound business advice wherever possible.
Whenever you work with us, we will honestly and openly discuss all possible solutions and outcomes and help you understand why they are essential. So if you are ready to receive sound, reasonable and practical advice, feel free to get in touch with us on 01793 852121 or post@nigelbutler.co.uk and we will work in a way that is very comfortable for you, whether it is through the phone, online or in person.