LONDON (Reuters Breakingviews) - The following memo comes from the fictional office of a fictional global bank chief executive, sent to employees on the anniversary of Britain’s vote to remain in the European Union.
It has been a year since Britain voted narrowly to remain in the European Union. As you know, this is a decision we supported, given our sizeable activities and investments in the United Kingdom. Even so, the financial and political uncertainty unleashed by the referendum has lasted longer than we expected. Changes lie ahead, but we are confident that we will be able to keep generating attractive and sustainable returns for our shareholders and employees.
The boost to consumer and investor confidence from the referendum result proved fleeting. While our trading businesses benefited from the volatility of the pound and renewed inflows to UK assets in the second half of 2016, the government’s decision to push through further austerity measures and tax rises has made for a challenging environment. The Bank of England’s move to raise interest rates three times in a short period caught many unaware. Strategic actions to realise synergies from our UK workforce - while unfortunate for the individuals concerned – leave us well positioned for the cycle.
Like many, we watched with concern the protests organised by the anti-EU “48 Percent” movement during its “month of rage” campaign. It is disappointing that campaigners have been unwilling to accept the democratic result and move on. Unlawful vandalism that targeted financial institutions is particularly unfortunate. This bank also voiced strong concerns about Home Secretary Theresa May’s proposal that businesses publish numbers of foreign workers. While that initiative was promptly rescinded, we have noted an increased reluctance among international talent to relocate to the United Kingdom.
The good news is that the euro zone’s prospects keep getting better. French President Emmanuel Macron’s new package of incentives for financial companies has persuaded us to begin enhancing our presence there, with select headcount moves in origination and advisory. We will also be closely following the European Central Bank’s renewed attempt to relocate clearing of euro-denominated derivatives to the single currency area. We do not anticipate this will impact the seamless service we offer clients. Our Paris-based subsidiary gives us flexibility.
Overall, our message is that it is business as usual. Following the leadership changes in Britain’s ruling Conservative Party, we look forward to working closely with Prime Minister Boris Johnson and his team. We are excited to hear about his proposals for a 350 million pound-a-week innovation fund for financial institutions. Together with you, and your commitment to our customers, I have huge confidence in our capacity to realise our potential as a truly European company.
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