Brexit breakthrough: How the City responded to the deal
Westminster was engulfed in drama this morning as Prime Minister Boris Johnson revealed he had secured a last-minute Brexit deal with the EU.
European Commission president Jean-Claude Juncker heralded the breakthrough as a “fair and balanced agreement for the EU and the UK”, and Johnson has urged MPs to pass the agreement during a special parliamentary session on Saturday.
In the Square Mile, the response was largely positive, as finance firms, lobby groups and analysts welcomed the progress. However, top City figures struck a note of caution, urging MPs to put an end to the uncertainty once and for all.
Read more: Johnson urges MPs to back Brexit deal as Juncker praises breakthrough for ‘peace and people’
City Corporation
“We welcome the signs of progress towards securing a deal,” said policy chair Catherine McGuinness.
“From the outset we have said that leaving without a deal must be avoided and that a disruptive exit would be the worst possible outcome for the City, London and the UK.
“There is now light at the end of the tunnel. We are urging all those involved in the process to put an end to the sustained uncertainty that has left business with its hands tied, unable to make everyday decisions on expansion, investment and recruitment.”
Confederation of British Industry
Director general Carolyn Fairbairn said: “If agreed by parliament, this deal unlocks a transition period, guarantees rights of the 4 million citizens living abroad in the UK and EU, and opens a pathway to a new EU/UK partnership. It would keep trade flowing freely across the island of Ireland and, most importantly, avoid a damaging no deal scenario.
“Yet business has serious concerns about the direction of the future UK-EU relationship. Decades of free and frictionless trade with the UK’s largest market, forged by thousands of firms big and small, must not be abandoned.
“Frictionless EU trade and regulatory alignment is vital for UK prosperity and jobs. The deal remains inadequate on services, which make up 80 per cent of the UK economy. And big questions remain about the feasibility of negotiating a new trade agreement deep enough in a 14-month transition period.
“If this deal does pass Parliament, firms will do everything possible to make it work for communities across the UK. Business will continue to challenge the Government to negotiate the vital future partnership on the basis of economic evidence.”
KPMG
James Stewart, vice chairman and head of Brexit, said:“Whilst some are clearly feeling buoyed by the deal between the EU and the UK Government on the revised withdrawal agreement, if recent history has taught us anything it’s that until this is passed in the House of Commons, and subsequently the EU parliament, it is not signed and sealed.
“Theresa May’s government also agreed the text of a deal in November 2018. So, there remain non-trivial probabilities for deal: no deal and an extension with no clear outcome beyond 31 October.
“Whatever the outcome businesses may hope for, it is still prudent to have a plan for all three scenarios.”
UK Finance
Chief executive Stephen Jones said: “This agreement provides a vital opportunity to secure an orderly exit that would minimise economic disruption on both sides of the Channel.
“It is crucial that the deal is now swiftly ratified by the UK and European parliaments, to provide much-needed certainty to businesses and their customers.
“The focus can then move on to establishing the long-term relationship between the UK and EU, including an ambitious framework for trade in financial services and close regulatory cooperation.”
London First
“Although leaving the EU will undoubtedly leave the UK economy worse off, continued uncertainty and the threat of no deal cannot loom indefinitely over business confidence, jobs and growth,” said chief executive Jasmine Whitbread.
“We would urge MPs to back this compromise deal and to focus on negotiating the best long-term relationship possible with the EU, so the future starts to look brighter.
“If after more than three years it turns out parliament can’t break the deadlock, then it is time to stop the clock, revoke Article 50 and take the final decision back to the people.”
UBS Global Wealth Management
“Amid fresh optimism about a Brexit deal, it is important to remember that the agreement must still be voted on by the EU 27 heads of state, as well as the UK parliament. As things stand, parliamentary ratification is far from certain,” said Dean Turner, UK economist.
“The outcome that investors feared the most, a no-deal Brexit, seems less likely now than at any time in the last few months. If parliament does not ratify the deal and a General Election is called, Boris Johnson will most likely campaign on the platform of having secured an agreement.
“The Labour party, on the other hand, has confirmed it will push for the new agreement to be put to a second referendum.”
TheCityUK
Chief executive Miles Celic said: “This is an encouraging development. It is important that the deal is now approved so that we can avert the damage and disruption a no-deal Brexit would cause to customers, industry and the wider economy here in the UK and in the EU.
“Critically, an approved deal will provide businesses with the certainty and security of a transition period, providing a stable platform from which to enter the next stage of negotiations on the future relationship.”
Federation of Small Businesses
Chairman Mike Cherry said: “Many small businesses will be relieved that there now appears to be a credible pathway towards securing a deal that avoids a chaotic no-deal on 31 October and guarantees a transition period, which smaller businesses need to adapt to the UK’s future relationship with the EU.
“Of course, the devil will be in the detail and we will now take time to examine the intricacies of the deal to make sure it works for all small businesses across the UK.”
Institute of Directors
“Business leaders will feel guarded relief at the breakthrough in Brexit talks,” said director general Jonathan Geldart.
“Business, particularly in Northern Ireland, will want to examine the details more fully before coming to a firm view, but they will be pleased that UK and EU leaders have made steps toward common ground.
“As MPs study the draft deal, they must keep firmly in mind the damage a disorderly exit could cause businesses large and small. A further extension offers no guarantees of avoiding this outcome, but if a passable deal is in touching distance then politicians on all sides should be pragmatic about giving us the time to get there.”
Linklaters
“The passing of an agreement would deliver much needed short-term certainty to financial institutions,” said global head of financial regulation Peter Bevan.
“Although a significant amount of contingency planning is in place for no-deal, certain areas such as derivatives trading would still face issues if that were the outcome. The revised proposal leaves open the longer term question of what the future relationship for financial services would be.
“It is therefore likely that work towards implementing a post-Brexit model of financial services will slow but not stop entirely. Attention will need to move quickly after any deal to whether and how market access will be preserved for the longer term.”
British Chambers of Commerce
Dr Adam Marshall said: “Businesses need a chance to analyse precisely what the terms of this agreement would mean for all aspects of their operations. This is particularly true for firms in and trading with Northern Ireland. As companies carefully consider the real-world implications, politicians must do the same.
“Let’s not forget, we’ve been here before. There is still a long way to go before businesses can confidently plan for the future. Companies across the UK and around the world will be paying close attention to what happens next – and whether the deal agreed can secure parliamentary support.
“For business, this deal may be the end of the beginning – but it is far from the beginning of the end of the Brexit process.”
Read more: Pound reverses gains as DUP rejects Boris Johnson’s Brexit deal
Investment Association
“Today’s deal provides welcome certainty to the investment management industry and the millions of savers and investors it serves,” said chief executive Chris Cummings.
“Now a new deal is on the table, it’s important that politicians on all sides come together in order to avoid the damaging effects of a cliff edge no deal.
“This renegotiated deal provides welcome certainty our country needs to safeguard the future of many industries including our own and the customers we serve. It will also ensure we retain our position as a world-leading centre for investment management which will be critical in the post-Brexit world.”
Main image credit: Getty