Amid ongoing uncertainty, financial services companies are still preparing for various scenarios when it comes to dealing with the fallout from Britain leaving the bloc. Riccardo Lamanna, the head of State Street Global Services, said: “The only certainty is that a change is coming.” He stressed some colleagues believe it could take up to a decade for the UK “to fully exit the EU”, delivering a devastating blow to those hoping for a clean break.
State Street’s latest “Brexometer” is a quarterly survey of attitudes within the financial services sector featuring interviews with 100 State Street Global Services.
This indicated a fall in the number of people positive about the prospects for global economic growth, from 38.2 percent in the final quarter of 2018 to 32 percent for the first quarter of this year.
There was a slight fall in the number of people with a negative outlook as well, from 30.4 percent to 30 percent, but the number who had a neutral viewpoint increased from 28.4 percent to 37 percent.
Ireland surpassed Luxembourg as the most attractive location for managers who wish to expand cross-border activities, with 46 percent of investors cited Britain’s neighbour compared with 36 percent for Luxembourg.
Next was Germany (27 percent), the UK itself (27 percent) and France (16 percent).
In addition, 24 percent of investors believe more European managers will try to open offices in the United Kingdom following Brexit.
Michael Metcalfe, head of global macro strategy at State Street, said: “Investors appear increasingly divided.
“This seems to mirror market conditions, which lurch from optimism around a deal or delay, to lingering concern of a no deal.
“Reflecting the chance of the latter, the proportion of investors expecting to significantly decrease their holdings of UK assets has jumped to a two-year high of 12 percent.”
Earlier this month, the European Commission blamed Brexit after figures suggested Britain was suffering its worst decline in business investment since the financial crisis of 2008.
Eurocrats claimed that the UK’s decision to leave the EU had resulted in a continued slowdown of business investment for the fourth quarter in a row.
In the Commission’s spring economic forecast, Britain’s annual gross domestic product slumped from 1.8 percent in 2017 to 1.4 percent a year later.
Britain’s GDP is expected to once again fall to 1.3 percent for both 2019 and 2020, according to the Commission’s figures.
Commission banking chief Valdis Dombrovskis commented: “Within Europe, any deviation from the technical assumption of unchanged trade relationships between the UK and the EU that underlies these forecasts, and in particular a ‘no deal’ Brexit, would dampen economic growth, particularly in the UK but also in the EU27, though to a minor extent.
“Within Europe, any deviation from the technical assumption of unchanged trade relationships between the UK and the EU that underlies these forecasts, and in particular a ‘no deal’ Brexit, would dampen economic growth, particularly in the UK but also in the EU27, though to a minor extent.”
(Additional reporting by Maria Ortega)