How Increased Tensions Between the EU and the UK Will Affect Fintech
Since the UK’s vote to leave the European Union last June, there has been much talk about the process of Brexit and the impact of the negotiations on the UK and on Europe, particularly in relation to financial services and fintech.
By calling a General Election on June 8th, the Prime Minister has asked the public for her own mandate to negotiate the UK’s withdrawal.
However, in the run up to the start of official campaigning, and as Theresa May fired the starting pistol on the steps of Downing Street on 3rd May, tensions between the EU and UK increased.
After the EU’s chief negotiator Michel Barnier said that Brexit will not be a quick or painless process the Prime Minister, following her visit to The Queen and marking the official start of the General Election campaign, said that the EU’s stance had hardened.
She has since stated that she will be a “bloody difficult woman” for President Juncker to deal with, and Juncker’s team have reportedly leaked conversations between the pair at a private dinner.
Now that relations between the two sides are strained, how will this affect the Brexit negotiation to come, and what impact will these increased tensions have on the fintech sector?
Whilst there are varied opinions about the impact of Brexit on fintech and financial services in general, the increase in tensions will certainly raise the level of uncertainty in the industry.
Many financial services, and fintech, commentators believe that thousands of jobs will be lost to other European capital cities such as Paris and Frankfurt. Others believe that whilst there may be some jobs that move, the vast bulk will remain in London because of the City’s status and industry hub.
The increasing levels of tension between the two sides in the run up to the start of negotiations means that both parties are likely to hold a stronger position as talks start, making a deal even more challenging.
Losing Britain’s Edge In The Negotiations
In the period since tensions heightened France has elected a new, pro-European, President in, Emmanuel Macron.
President-elect Macron will now become one of the most important players in European politics, and will have a big point to prove.
The increase in tensions between the EU and the UK will present him with an additional opportunity to prove his pro-European credentials, especially because of his hopes to lure financial services jobs to Paris from the City of London.
It’s clear that the increase in tensions between the UK and the EU over recent days and weeks will, in all likelihood, have a negative impact on the financial services industry and fintech in the UK.
However, as both sides have hardened their position it’s more likely that both sides will lose out.
No one truly wins if leaders on both sides simply add fuel to the fire. Businesses and industries on both sides will surely suffer.
Many businesses in the financial services industry, including those in fintech, have already made, or are in the process of making, contingency plans for their post-Brexit business-models.
The longer the tensions exist and both sides maintain this tough stance, the greater the level of uncertainty and the more likely fintechs are to see moving elsewhere as a safer option.
One thing is certain though – only once the negotiations have concluded will we know the full impact of Brexit.
As the sector faces these challenges, businesses need to ensure their fintech solution is proven and rigid enough to withstand any potential threats, but also flexible enough to respond to regulatory changes.
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