A major concern following a potential Brexit would be the impact on the UK’s hugely important financial and professional services sector. Harrison Drury’s Nick Booth analyses the arguments.
The impact on jobs in a key sector
EU ‘passporting’ means non-EU financial and advisory firms can deliver services across the EU, provided they have a branch or subsidiary in the UK. This means a Brexit could prompt EU firms to relocate jobs, which could severely damage London as a leading global financial centre.
Moreover, the implications of a Brexit are not restricted to the City of London. Around two thirds of the 2.2 million people working in the financial and professional services industry are based outside London. Of these, more than 200,000 work in financial and related professional services in the North West.
Should North West firms be concerned?
The relationship between London and our regional financial centres is mutually beneficial. Strong regional centres increase the global appeal of London by widening the talent pool and offering growth opportunities for firms based here.
The UK’s buoyant sector attracts some of Europe’s ‘brightest and best’, who can work in the UK thanks to the EU’s free movement of labour.
The UK’s high net migration is a concern for many in the leave camp, but this should be weighed against the potential damage that a loss of skilled workers could have on the economy. This would be a key consideration in any post-referendum negotiations following a vote to leave.
Are ‘Leave’ impacts being overstated?
Leave campaigners remain sceptical about the real impact a Brexit would have on the financial and professional services sector.
They insist that the industry is so deeply ingrained in the British economy that the effect of the UK’s exit from the EU would be negligible because the financial services sector is already global in nature.
Brexiteers believe problems over ‘passporting’ and reduced access to a talent pool are outweighed by more important issues, such as parliamentary sovereignty and less red tape for business.
The leave campaign also points out that a Brexit would be followed by negotiations, during which the UK would try to protect the positive aspects of EU membership as part of an economic and trade deal.
Wider considerations should be kept in mind
Of course, professional services do not exist in a vacuum – they serve the needs of their clients.
This means the impact of ‘Brexit’ on financial advisers, accountants and solicitors would hinge largely on their client base, the wider economy, and market forces.
Some firms have a client base directly affected by the EU – the financial services sector, for example. Meanwhile, many regional law and accountancy firms work in areas with strong economic ties to the EU, such as agricultural communities.
It is impossible to say just how great an impact a Brexit would have on the financial and professional services sector.
Any impact would vary in relation to a firm’s size, region and client base. In many cases legislative considerations might be less important than general economic conditions, such as interest rates, the strength of the property market and economic growth.
Harrison Drury’s team of financial and professional services lawyers provide a wide range of legal advice to banks, accounting and finance firms and other professionals such as architects and surveyors. For more information call Nick Booth on 01772 258321. We have solicitors based in Preston and all throughout Lancashire happy to help with any legal enquiries.