By Jon Swannell
It has undoubtedly been an unsettling week since the result of the referendum was announced. It not only confirmed that we voted to leave the EU but has also subsequently resulted in a huge amount of political uncertainty and highlighted deep divides within the UK. Almost without exception this has provoked an angry response from those I have spoken to, both in the City and more broadly across my group of friends based in London. I have to admit my own response has been the same. The early negotiating stance, or lack of, from the EU indicates that we will not be able to remain within the single market without paying in and accepting freedom of movement. Coupled with this, if we leave we lose our vote and any influence over future EU legislation; it’s hard to see the upside. Yes, in theory we can strike favourable trade agreements with Canada, Australia, China and others but first and foremost the EU should remain our most important marketplace. This is critical to the financial services industry in the UK arguably more than any other.
But what does this mean for the financial services headhunting industry? Clients have understandably been preoccupied but as yet no searches have been cancelled and the overall response has been one of ‘business as usual’. The most obvious downside is the prolonged period of uncertainty that we face but that is hardly new to the banking industry and my expectation is that key, strategic hires as well as upgrade and replacement hiring will continue to take place. We are unlikely to see much in the way of growth while it remains unclear what the future holds but then we haven’t operated in a growth market for several years now and were not expecting to in the immediate future either. Brexit clearly adds to the uncertainty but my hope is that it doesn’t have a significant detrimental effect, at least in the short to medium term.
Despite a handful of misleading news stories, I also do not expect to see a major shift of people from London into other EU financial centres while it remains unclear whether or not it will be necessary to do so. If required there will be some movement to address EU passporting issues but it is highly unlikely that London will lose its position as a major, global financial centre. Some people I have spoken to have argued that Brexit will make London more attractive if it results in a less regulated environment that is free from EU financial transaction taxes and bonus caps. Mark Carney, who has emerged from the last week with more credit than anyone else in my opinion, put it very succinctly when he said, “The question is not whether the UK will adjust but rather how quickly and how well.”
I certainly don’t mean to sound complacent as there is definitely a lot of nervousness, which I share, but financial services businesses, and their clients, cannot put everything on hold for at least the next two years. Let’s hope the ‘business as usual’ response I have been getting in the last few days continues. This could of course all change for the worse if it becomes clear that we will exit the EU acrimoniously. I am personally hopeful that common sense will prevail.