The United Kingdom may need to diverge from European political institutions if it is to remain a world-class financial centre in the long term, senior Airmic members heard at a Brexit summit at the House of Lords last month, which explored the current political impasse and debated future relations between the UK and EU. The debate was led by a panel of senior representatives from insurance, broker, risk management and political sectors.
While few at the event thought that a no deal scenario is the most likely outcome, and certainly one of the least desired, it is the one demanding most attention at a business and political level. The London market is resilient to its core and has done all it can to prepare for a hard exit, the panel said, but it is a challenge for all players to understand what a no-deal exit would really look like.
For the risk management community, the Brexit uncertainty is a challenge and an opportunity. UK and EU risk managers have been embarking on continuous scenario testing and contingency planning for some time, the panel noted. And while no EU businesses want the UK to leave the EU, the prospect of a no deal scenario is unlikely to be a “disaster” for large international corporates in continental Europe.
The sense of frustration at the highly political nature of the negotiations was palpable among all at the debate. In response to questions from the floor, it was noted that both UK and EU politicians are already manoeuvring ahead of the “inevitable” blame game that will ensue if Britain does not achieve a deal in the next two weeks.
While the clock is running down on Theresa May’s government to break the impasse, a clear theme was that we are very much at the beginning of Brexit negotiations, not the end.
But there was also a hope that the next phase in the Brexit negotiations could be conducted in a less damaging manner. If you can get the next phase out of the headlines and with a more technical, less political focus, it could depoliticise the process, it was argued.