Article 50’s triggered. We’re leaving. It’s over. Close the shutters, wind down the blinds, the UK’s in limbo.
I wrote a blog about a year ago attesting to the impact ‘Brexit’ had on the financial services and hiring market as a whole. In an effort not to repeat myself it ultimately said; who knows? We’ve dived into the deep end of ambiguity not having any real idea what the world will look like in the future; a status we haven’t really lived through for decades. Sure there have been times of uncertainty. For example, the year 2000 saw the bubble burst and companies and people alike were left scratching their heads wondering what was next. funny how the answer turned out to be more of the same really. Fast forward to 2007 and we saw the financial crisis and the end of banking as we know it! Again people were stuck in limbo wondering what was going to happen, and again the answer was more of the same, albeit with a veneer of regulatory control. Banks can’t prop trade, they have to be more transparent and can’t gamble our money as well as the obvious changes like the Basel III liquidity buffer or reduction in more complex riskier products, but banking has remained broadly the same, at least to the outside world.
Brexit however is an upheaval. It will fundamentally and forever change the way that the UK governs itself and the relationships it has with the rest of the world. The answer to the question of “what’s next” being “much of the same”, doesn’t seem to be enough anymore. So what are we doing about it?
To be honest, it’s pretty hard to say. It’s difficult to come up with a clear strategy when you have no idea what you’re strategising for. The fact that Brexit means Brexit equals very little. The unclear definition of what a soft vs a hard vs an over easy exit from the EU hasn’t really helped the dialogue. Europe is becoming seemingly exasperated with the UKs inability to come up with a clear and concise vision of the world after it leaves and this lack of clarity has left something of void.
While this is entertaining from a political perspective (I personally have enjoyed the visible panic on the faces of the Brexit Secretary and his shadow counterpart when asked for anything more than a sound bite) it is somewhat infuriating from a business perspective. How can a global business with European clients based in London plan for the future when they have no idea what the terms of those relationships will look like in 2 years time?
This is the question faced by many of the large London financial institutions and their leaders. The answers to this question are many and varied (as) can only be expected when the future landscape is so unknown.
Some have already made up their mind. One leading UK bank with no European operations is preparing for the worst i.e. that they won’t be able to trade with European entities without having a European foothold. This has had a noticeable effect on the hiring market. They’re essentially building a new bank complete with its own front office, treasury, risk & finance architecture. This is an immensely complicated programme and will surely lead to a consistent stream of roles for the next 2 years at least.
Others are remaining relatively silent. Those with European operations already have the relative luxury of simply extending their current reach or lifting and shifting processes from one location to another. Of course, this is a massive over simplification and every organisation will have their own unique challenges which will inevitably guide their responses. These problems and solutions are all being discussed very much behind closed doors, perhaps to retain a competitive advantage, or the more cynical part of me thinks it might just be because no one wants to admit how little they know about what they’re going to do.
To be honest, it’s probably best that information doesn’t come to light. The market either needs assurance that good things are coming or at least not hear about the all the bad parts. At the same time, it is still too early to say what’s going to happen. Looking at the British Pound over the last few months you would have thought that the market doesn’t believe in the UK’s strength with it falling from the giddy heights of 1.18 Euros to nigh on parity towards the end of August. Two weeks later the sterling actually recovered. Perhaps a mix of Angela Merkel’s significantly reduced mandate from the German Elections, or maybe there was something in Mrs May’s speech in Florence that spoke to traders.
What I’m trying to say is that everything is still very much up for grabs. The UK hasn’t yet laid out what it wants to achieve beyond the now oh so common “transition deal” phrase that everyone’s using nowadays. The EU’s position of strength seems to have been weakened thanks to the rise of right wing anti EU parties, most notably in Germany recently. This ambiguity seems to have defined the overall financial services’ response to the problem. Wait and see, and react accordingly as actual information comes through.
What hiring will come out from this is just as hard to predict as the response itself. Without knowing the main changes that will come into play, how can anyone decide on actions or hiring plans? Brexit will most likely be dealt with in 3 ways.
By the looks of things, the majority of the market is in a “wait and see” mood. They don’t want to sink large sums of money into programmes which might not even be needed. At the same time, while there is nothing material to work with, what’s the point in delivering anything? Is there even a point to planning for the future when you don’t know what it is? We can pontificate all we want about what’s going to happen but until there’s something solid to talk about, it will remain enigma wrapped in a mystery. I’m sure that in a year’s time, when I write something about this subject again, things will be a lot clearer and I’ll have something concrete to talk about.