City veterans and business leaders have cautiously welcomed the Prime Minister’s Brexit deal, but warned a similar deal for the City is now ‘urgent’.
The trade deal, announced on Christmas Eve and with details still being raked over, follows four years of negotiation with the European Union.
Before the stock market closed at lunchtime on Thursday, it rose marginally on news a deal was imminent and the pound steadied at €1.11.
Prime Minister Boris Johnson announced a Brexit deal on Christmas Eve
Remainers and Brexiteers alike hailed the certainty that the agreement will bring business and markets.
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Economist and Brexit advocate Gerard Lyons, who has advised Boris Johnson, said: ‘I think the deal will be received well economically and politically, and has already been received well by financial markets.’
Lyons forecasts the economy will grow 8 per cent next year and rise ‘above pre-Covid levels’ in early 2022. He pointed out there will still be ‘details’ in the deal that need scrutinising and noted it ‘doesn’t cover financial markets’.
But he said it has ‘relieved a degree of uncertainty’ and should be ‘a positive for the UK and provide a good future relationship with the EU’, which will bring a boost to the economy alongside astute policy making.
Crispin Odey, a Brexiteer and hedge fund manager said: ‘Finally we have forced Europe to treat us as a sovereign country. They didn’t want to do that and it appears as though we have got as close as you can get to a free trade deal – a proper accord.
‘Obviously, there’s going to be a hell of a lot of paperwork involved in trading with Europe… But equally, technology is coming along all the time, so these things can be worked out.’ He said the ‘big elephant in the room’ is services and the City of London.
Economist and Brexit advocate Gerard Lyons, who has advised Boris Johnson, said he thinks the deal ‘will be received well economically and politically’
The services sector contributes around 80 per cent of UK GDP and is not covered by the deal. The financial services industry is particularly important and London is the world’s second most important financial centre.
Odey said Covid-19 was now ‘the real problem’ for the economy.
But Nigel Terrington, chief executive of financial services provider Paragon Bank, said: ‘A pragmatic trade agreement is good and should help rebuild confidence, but they need to turn their urgent attention to financial services, given its significance to the UK economy.’
Veteran fund manager Richard Buxton, of Jupiter Asset Management, said: ‘The sad fact for the City – aka financial services across the country – is that it’s long been clear the Government wasn’t going to fight to secure a longstanding deal.’
‘So we have all put in place arrangements, with offices in Europe, to try to carry on serving European clients as best we can.’
Crispin Odey, a Brexiteer and hedge fund manager, said the ‘big elephant in the room’ is services and the City of London
But Lord Rose, chairman of Ocado and former head of the Remain campaign Britain Stronger in Europe in 2016, said there was a sense of ‘relief that we’ve got a deal’.
The former Marks & Spencer chairman added: ‘Congratulations to everybody because it took all sides to come to the party. I’m sure the devil is in the detail.
‘We know there will be more bureaucracy. There will be some things that we as individuals cannot do that we have been used to doing for 45 years. That might come as a bit of surprise.’
‘It’s going to be a compromise. All negotiation is a compromise. But for me, this is the lesser of two evils.’
Kevin Ellis, PwC’s UK chairman, said: ‘The narrative of the last four or so years has been about seeking certainty and, after a series of false starts, news of a deal provides that.
‘Taken alongside the positive progress on vaccinating against Covid-19, business leaders will feel they can start planning for the future.’
But Peter Hargreaves, co-founder of Hargreaves Lansdown, said: ‘I voted to leave the EU. Fully out. There was no way we would get a sensible deal because that would finish the EU because then every other country would want one.
‘In my opinion, it should only ever have been a free trade area. All this political union is absolutely ridiculous.
‘I think over the next five years we’ll leave completely even with this deal.
‘We should remember that we are a resilient bunch. The Covid virus has caused a lot of grief in this country and laid to waste the hospitality and tourist industry. It’s been terrible for them but they will come back stronger.’
Hargreaves added: ‘But we have adapted to the situation and we would have done exactly the same thing had we come out of Europe. So I don’t care what this deal is, it’s a bad one.’
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