Sunday 18 March 2018

City firms warning over triggering Brexit plans

Chancellor Philip Hammond
Chancellor Philip Hammond

Kalyeena Makortoff

Firms in London's financial district will begin activating their Brexit contingency plans unless the British government provides clarity over a transition period by year-end, the City of London Corporation has warned in a letter to the UK Chancellor.

Catherine McGuinness, the corporation's policy and resources chairman, told Philip Hammond that it was "critical" that UK-based financial services firms have "urgent clarity" from the UK and EU on "time-limited, legally binding transitional arrangements" as well as the principles that underpin them.

"While businesses will have different cut-off points for activating contingency plans, clarity will be needed by the end of this year," Ms McGuinness wrote in a letter to the Chancellor.

If delivered in time, those details could allow companies to slow, or even scrap, their contingency plans, she said.

"For businesses that have already begun activating contingency plans, clarity on transition will allow them to decelerate those plans.

"For others, it may help them avoid taking unnecessary contingency measures entirely. The earlier transitional arrangements are agreed, the more value they will have for businesses and their customers."

The letter - written ahead of the Chancellor's Budget on November 22 - also included calls to cut tax rates down from 17pc for corporate treasury centres, which are common among Asian multinationals and operate as in-house banks for their businesses.

The City of London Corporation wants to make UK rates competitive and "allow London to win more business from Asian rivals" including Singapore and Hong Kong, who tax at 8pc and 8.25pc, respectively.

It was part of a broader call to action on fiscal policy, which Ms McGuinness said "must go beyond Brexit considerations".

But Germany's financial regulator warned earlier this week that Britain was nearing a "point of no return" for financial services firms, which are unable to wait much longer for a mutual-recognition agreement that would allow them to continue serving customers in each others' markets.

Speaking in London on Tuesday, Bafin president Felix Hufeld said that it will be hard for companies to stall or halt plans if Britain fails to strike a deal by the first quarter of 2018.

"Have we already hit a point of no return? I don't think so. But we're getting closer," he said. (Press Association)

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business