The City’s view on Britain triggering Article 50 to call time on its 44-year relationship with the European Union is that the hard work starts here.
Nine months after the UK voted to quit the EU in a referendum, Prime Minister Theresa May activated the official mechanism in the Lisbon Treaty to formally begin talks, expected to last at least two years.
Stephen Martin, director general of the Institute of Directors (IoD), summed up the view for much of the City. “Now the real work begins,” said Martin. “Ministers must roll up their sleeves and focus on getting a good deal for Britain in the tough negotiations ahead.”
The IoD boss said among the priorities for his members were maintaining tariff-free trade and cutting red-tape.
May has already signalled that she plans to leave the EU single market and the customs union, in what is called a hard Brexit, giving Britain control over its borders and courts.
CBI President Paul Drechsler hoped the talks are able to secure a series of quick wins, with agreements to guarantee the right to remain for EU citizens in Britain and UK nationals in Europe, which is broadly agreed. Drechsler said: “The first six months are crucial as the UK heads into these challenging and unprecedented negotiations. Securing some early wins is therefore vital to set us on the right path.”
But the City’s key financial services industry is more focused on a long-term deal that protects the £205bn of revenue it brings in each year and the 1.1 million people it employs.
Chris Cummings, chief executive of the Investment Association, said: “We need a bespoke agreement that hinges on mutual market access, access to global talent, legal certainty and preserving the entirety of the UK’s financial services ‘ecosystem’.”
But until a long-term deal is struck the City expects plenty of turbulence over at least the next two years.
Senior economic adviser at PwC and former Monetary Policy committee member, Andrew Sentance, said: “During this period we will probably see some bouts of financial volatility affecting the value of the pound and reduced business and financial confidence.”
But Saker Nusseibeh, chief executive investment giant Hermes, pointed out that it was just as easy to snatch triumph or disaster from these negotiations, which will affect generations. Nusseibeh said whether “we arrive at the end of the rapids in a wide tranquil lake” or “sail over a waterfall with the sound of Colonel Bogey is anyone’s guess”.