Of course, there were a number of debatable assertions throughout the paper, while the key question that remains is whether the UK and the EU can locate some common ground during negotiations.
The whitepaper is also being interpreted differently across multiple sectors, and the financial services market is no exception to this rule. But how will the government’s plans impact om this market, particularly in areas such as recruitment? Let’s consider the key takeaways and find out:
Free Trade and a New Customs Arrangement
One of the biggest areas of concern surrounding Brexit is the issue of free trade, with this central to the projected growth of the UK economy in the near term.
To safeguard this, the government has proposed the phased introduction of a Facilitated Customs Arrangement, which would negate the need for customs checks and stringent controls between the UK and EU. Essentially, it would create a combined customs territory, and one that empowers Britain to control tariffs while also striking trade deals with other nations.
However, this would only keep Britain in a de-facto single market for goods as opposed to services, so the risk the financial sector and London’s status as the world’s fintech capital would remain.
Even if services were covered by the new customs arrangement, there remain serious concerns that the EU would agree with such a measure. After all, the bloc is opposed to offering free trade agreements in instances where potential partners do not accept the other four pillars of freedom (including movement).
Given our government’s stance on EU migration (which is also crucial to the future of the fintech market), we cannot see them compromising on this even to secure a favourable customs arrangement.
Fudging the Issue of EJC Jurisdiction
Sovereignty is another issue that has underpinned the Brexit vote, with the government an hardcore followers pushing for an end to the jurisdiction of the European Court of Justice (ECJ).
In this respect, the whitepaper appears to be something of a cop-out, as while Theresa May has spoken bullishly about the UK leaving the jurisdiction of the ECJ, she has softened this stance in writing. More specifically, she has proposed the formation of a ‘joint committee’ of UK and EU representatives to oversee regulatory disputes, before subsequently referring issues back to the ECJ in instances where a solution is not agreed.
This not only raises the question of the ECJ is still sovereign, but it also has considerable implications for financial service providers and recruiters within the space.
Firstly, established wealth management firms such as WH Ireland will be faced with a convoluted chain of command when their markets are regulated. This could make it hard for the financial markets to receive the guidance and protection that they need, which could in turn put everyday consumers at risk.
From a recruitment perspective, the uncertainty surrounding future labour market conditions and regulations could also continue, although some solace may be provided by the overriding authority of the ECJ.
The Bottom Line
While the publication of a whitepaper represents a significant sign of progress for the government, it’s fair to say that it will not provide the clarity and reassurance that many had hoped for.
In fact, the fudging of some key issues will have come as a disappointment to some, although this should perhaps not be a surprise given the fractured nature of the government.
The future certainly remains unclear for financial service recruiters, as well as London’s status as the fintech capital of the world. So, the government now needs to work on putting some flesh on the bones of their proposals, and perhaps adopt a bolder and more concise approach to the ongoing negotiations.
