Brexit briefing: Contract continuity flagged as massive no-deal issue
As far as Brexit headaches go, John McFarlane says that while Barclays is on top of job relocations, he's more concerned about rewriting "hundreds of thousands" of contracts.
He's not alone. Andrew Bailey, head of the UK Financial Conduct Authority, said "contract continuity" is among the biggest potential disruptions in a no-deal, no-transition Brexit. Both Bailey and McFarlane, who also chairs London's banking lobby, testified before MPs this week.
A week ago, data from the EBA showed the scope of the issue, and that money is already on the move partly for this reason. The issue arises because one side or the other of a contract can meet its obligations only thanks to an authorisation that's set to disappear once the UK leaves. That may result in a firm being obliged by contract to do something that regulation forbids. "A bank which enters into a contract which becomes illegal to perform by reason of Brexit may well be liable in damages for its non-performance to the counterparty," said Simon Gleeson, a regulatory partner at Clifford Chance in London. "Dealing with this is so much in everyone's interest that I'm amazed it hasn't been addressed."
Record FDI flows for UK
Net flows of foreign direct investment into the UK hit a record high in 2016, boosted by major takeovers, according to Britain's official statistics office.
Net FDI flows jumped to £145.6bn, up from £25.3bn in 2015 and the largest value recorded for a year since records began in 2006. Anti-Brexit campaigners had warned before the June 2016 referendum that a vote to leave the EU would make Britain less attractive place to foreign investors. Theresa May has welcomed big takeovers as a sign of confidence in Britain.
Swedes urge UK finance deal
Sweden has made a post-Brexit peace offering to the UK by proposing an extensive free-trade agreement that covers financial services.
Since the UK doesn't seem to be interested in Sweden's preferred option, a Norwegian-style deal, "then we are looking at something like Canada plus, plus, plus," said EU and trade minister Ann Linde.
Such an arrangement would be "far more reaching than the Canadian trade agreement" with the EU, as it would extend to financial services, Linde said.
Sunday Indo Business