Britain will lose its status as Europe’s top financial center unless it keeps borders open to specialist staff, improves infrastructure and expands links with emerging economies, TheCityUK said in a report published yesterday.
The report from Britain’s most powerful financial lobby group said continental Europe might eventually become the preferred destination for banks, insurers and asset managers as they relocate business there to retain access to the EU single market.
Although companies might begin by initially shifting a small number of jobs to Europe, this might begin to accelerate when property leases expire, they carry out business reviews or when the cost of capital becomes uneconomical.
“Shifts out of the UK may gradually erode the ‘cluster effect’ of the financial ecosystem, with the threat of a tipping point in the ecosystem being reached,” the group said in an 83-page document outlining how the industry could thrive over the next decade.
Securing a favorable deal for financial services from the Brexit negotiations is one of the biggest challenges for the UK government, because it is its largest export sector and biggest source of corporate tax.
Britain’s finance industry could lose up to ￡38 billion (US$49 billion) in revenue in a so-called “hard Brexit” that would restrict its access to the EU single market, according to some estimates.
The report said the government must ensure businesses can recruit people to fill skill gaps and must simplify the process of getting a visa.
Brexit has already made it harder to attract people to Britain, and the government is introducing policies making immigration more restrictive and expensive, the report said.
It said the cost of hiring an employee on a five-year visa has risen by 250 percent to ￡7,000 over the last year and the minimum salary at which a business may recruit staff on a visa has risen by almost half since 2015.
Aside from Brexit, the report also looks at broader issues that threaten the competitiveness of the City of London as a financial services hub, including a need to invest in transport networks and technology.
It calls for government and financial services to work together closely to develop international trade policies, and to improve the country’s digital and physical infrastructure, including speeding up travel times between airports and different financial centers around Britain.
One financial services industry veteran who had independent access to the report said it lacked urgency and there was too little on the impact of Britain leaving the EU, given that “Brexit is a catastrophe for the City.”
Former financial secretary to the Treasury and city minister Mark Hoban, who chaired the report, said that Brexit was only one of several challenges facing financial services.
“The challenges facing financial services are much more than just about Brexit. It is about emerging financial centers and also, to a degree, about unmet needs in the UK as well,” Hoban told reporters. “There is a very clear appetite to tackle these issues at various levels of government.”
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
Taiwan will prioritize the development of silicon photonics by taking advantage of its strength in the semiconductor industry to build another shield to protect the local economy, National Development Council (NDC) Minister Paul Liu (劉鏡清) said yesterday. Speaking at a meeting of the legislature’s Economics Committee, Liu said Taiwan already has the artificial intelligence (AI) industry as a shield, after the semiconductor industry, to safeguard the country, and is looking at new unique fields to build more economic shields. While Taiwan will further strengthen its existing shields, over the longer term, the country is determined to focus on such potential segments as
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
COLLABORATION: Given Taiwan’s key position in global supply chains, the US firm is discussing strategies with local partners and clients to deal with global uncertainties Advanced Micro Devices Inc (AMD) yesterday said it is meeting with local ecosystem partners, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to discuss strategies, including long-term manufacturing, to navigate uncertainties such as US tariffs, as Taiwan occupies an important position in global supply chains. AMD chief executive officer Lisa Su (蘇姿丰) told reporters that Taiwan is an important part of the chip designer’s ecosystem and she is discussing with partners and customers in Taiwan to forge strong collaborations on different areas during this critical period. AMD has just become the first artificial-intelligence (AI) server chip customer of TSMC to utilize its advanced
RSS