MNI ANALYSIS: Government Studies Won't Alter Brexit Plans

- Time Is Of The Essence For Agreeing Transition Framework

By Kieran Williams

     LONDON (MNI) - The government's detailed Brexit impact studies, which it

has been pressured into releasing, are unlikely to have a material impact on

contingency planning by businesses say CityUK, a representative body for UK

based financial services.

     The studies will now be released after Labour MP's invoked an obscure rule

to get the government to publish the papers Wednesday. The published reports,

however, are likely to take around 3-months to be issued and are expected to be

heavily redacted.

     Taking questions in the commons on Thursday Secretary of State for Exiting

the EU David Davis said that the government will not release so much information

that it risks the UK's negotiating position.

     "Business are well advanced in their planning. Many are already

implementing or preparing to implement their Brexit contingency plans. It is

doubtful these sectoral analysis will tell them anything new," CityUK told MNI,

commenting on the 58 government studies on the impact of Brexit.

     Speaking to MNI, Julian Jessop, Chief Economist at the Institute of

Economic Affairs, said that the effect of the information released will depend

"whether the impact studies simply identify problems or actually discuss

solutions. I'm sure insiders in each sector will already be well aware of the

risks and also the opportunities. What they really want to know is how

politicians (in the UK, EU and the rest of the world) plan to respond."

     Kier Starmer, Labour's shadow Brexit Secretary said on Thursday that "this

debate is about transparency and accountability. Ministers cannot keep

withholding vital information from parliament about the impact of Brexit on jobs

and the economy."

     When reached for comment a spokesman for Starmer said that the opposition

had pushed so hard for the release as it believes businesses should have all

information possible.

     CityUK quoted research conducted on its behalf by Oliver Wyman, which at

the upper end of the forecast range predict that 75,000 UK financial services

jobs could be lost if the UK leaves with a 'no deal' Brexit and falls back on

WTO rules.

     CityUK say that at the other end of the spectrum "an exit from the EU that

puts the UK outside the European Economic Area (EEA), but otherwise delivers

passporting and equivalence and allows access to the Single Market on terms

similar to those that UK-based firms currently have, will cause some disruption

to the current delivery model, but only a modest reduction in UK-based

activity."

     As such they estimate that revenues from EU-related activity would decline

by approximately stg2 billion (around 2% of total international and wholesale

business) and that around 4,000 jobs could be at risk.

     The transition deal has been described by both Chancellor Philip Hammond

and Bank of England Governor Mark Carney as a "wasting asset." Despite this

negotiations on the issue are yet to begin.

     "EU and UK negotiators cannot delay discussing a transitional deal any

longer if they want it to hold any real value. Firms are beyond the planning

stage now. If they haven't done so already, most will be ready to press go on

their contingency plans in the New Year," said Miles Celic, CEO of CityUK.

     Davis said earlier today that if the European Council judges that the UK

has made "sufficient progress" at its mid-December meeting then negotiations on

a transition deal could begin "almost immediately," but stressed that

negotiations would still be needed.

     "[The government] can still take their foot off the accelerator if a

transitional deal is agreed, but without progress soon, it may be too late. Once

businesses start moving, there is no reverse gear. It is simply not efficient or

economically viable to move operations twice," said Celic, highlighting the

importance of the terms of a transition deal being agreed as soon as possible.

--MNI London Bureau; +44 203 865 3809; email: kieran.williams@marketnews.com

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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