 "A British Union flag flies in front of an EU flag during a pro-EU referendum event at Parliament Square in London, Britain")
A British bank executive recently approached Prime Minister Theresa May's office with a question. The Treasury said it was the point of contact for discussing Brexit issues. The Department for Exiting the European Union said the same thing. Who was right?
Neither, he was told. Talk to us instead.
That story, retold by a banker who asked to remain anonymous, is symptomatic of industry complaints about engaging with May's government as it begins pulling Britain out of the European Union. May has already put financiers on notice that they're losing their privileged perch in policy making considerations, so the communications confusion only serves to deepen their anxiety.
"The government needs to develop a more strategic and joined-up approach around financial services," said Andrew Gray, head of Brexit for UK financial services at PricewaterhouseCoopers in London.
The portrait of bungled communications, which could prompt banks to accelerate the movement of highly paid jobs from London, emerged from interviews with government officials, bankers and lobbyists. Financial services account for almost 12 percent of the economy, more than 1 million jobs and over £60 billion ($73 billion) of annual tax revenue.
May herself has done little in public to quell worries among bankers aside from meeting representatives of the industry during a recent trip to New York. Officials at last week's Conservative Party conference said banks will get no special favours in the Brexit negotiations and suggested banks threats to leave London are empty.
The days when 10 Downing Street and the Treasury put the interests of the City of London at the top of their list of priorities were over, said one of May's ministers, asking not to be named. The new government must focus on small and mid-sized businesses, too, the minister said.
With banks resigned to losing the so-called passporting rights that allow them access to the rest of the EU from their bases in London, they are now focusing their lobbying on winning a transitional deal to preserve the status quo until a long-term relationship is forged.
The banking industry's concerns were on full show at a London conference on Tuesday at which James Bardrick, the UK head of Citigroup, said lenders are trying to work out how soon they must carry out contingency plans to protect their businesses.
"If we are outside the EU and we don't have what would be a stable and long-term commitment to access the single market then a lot of the things we do today in London, we'd have to do inside the EU-27," said Rob Rooney, chief executive officer of Morgan Stanley International, the Wall Street firm's most senior banker in Europe.
A major dilemma for banks is that they are used to dealing with the Treasury, now run by Chancellor of the Exchequer Philip Hammond. While the department is seen as sympathetic to their concerns, the nagging worry is it lacks the power it once did since it's not on the Brexit frontline.
David Davis is set to negotiate the withdrawal, Boris Johnson helms the Foreign Office and Liam Fox has the job of striking trade deals. All campaigned for Brexit, unlike Hammond.
The result is conflicting messages on finance. Hammond took office in July having told bankers he knew "access to the single market is crucially important to your industry" and "we want to work collectively with you" to ensure it's maintained. Officials now say he accepts Britain may have to give up membership of the market.
London home prices see worst streak since 2009
London house prices fell for a fifth month in August, the worst streak for the UK capital since the depths of the recession seven years ago. The 0.6 per cent drop, taking the average value to £580,930, followed a 1 per cent fall the previous month, LSL Property Services and Acadata said on Saturday. The annual pace of growth has now slowed to just 2.2 per cent, the weakest since early 2012.
The decline is being led by higher-priced boroughs in central London, according to LSL. That analysis is echoed in forecasts by Savills, which said last month that luxury homes in the city will slump 9 per cent this year, the most since 2008, after Britain voted to leave the European Union.
Property website operator Rightmove has also highlighted a divergence in London's market, with the most expensive district - Kensington and Chelsea - seeing asking prices down almost 12 per cent in the past year.
Bloomberg
