Piece of Mind - BREXIT: A step into the unknown - so what next for financial services?

24 June 2016James Goad

Financial AdvisoryRetail Financial ServicesWealth Management & Private Banking

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Over the past few months, the debate about BREXIT has been fever pitch both around the dinner table and across our industry events. Well finally the day has arrived and I awoke to a cocktail of emotions as the reality of stepping into the unknown starts to sink in.  

Already we are feeling the economic implications with a slump in the value of the pound and S&P saying that our AAA rating is untenable. Mr Cameron also gave an emotional speech to say he was stepping aside, but to whom… the line behind him does not fill me with confidence.  But is this just a blip while we push the reset button, and if so how long will it last?

As I slurp on my coffee and take a deep breath, as an ‘inny’ I wanted to reflect on this tumultuous moment in our history and summarise the feelings I felt.

Listening to Radio 4 this morning and Nigel Farage’s comments before the counting started last night, I think even the leave camp believed this would actually happen. Faced with an economic dip; employment and political uncertainty; a leadership bubble; and a Scottish referendum it is difficult to know what the ramifications will be… good and bad.

What this referendum has done is shine a light on how marginalised our great nation has become. At the risk of being too blunt, there are four groups within the leave camp I wanted to touch upon:

  • Poorer communities and the working class – As the fifth strongest economy in the world I am truly saddened that as a nation we have let this marginalisation happen. I can understand why a lot of the fear rhetoric – particularly around immigration – rings so true here. And yet we have seen this coming for years and have done nothing to bridge the gap. We only have ourselves to blame and now need to work together to build a better country we can all prosper from.
  • The baby boomers – It is difficult to know who but as the chart below demonstrates, there was certainly a ground swell of support amongst the Millennials and generation X-ers to remain. So why would a generation who have never had it so good economically; sitting on healthy pension pots; benefiting from soaring property prices – the list goes on – want to leave? What legacy will this generation leave? The history books will have the final say – will they be thanked for being brave and showing us the way, or will they be forever remembered as bringing this country to its knees for future generations to pick up the mess?

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  • The legal community – It surprised me that most lawyers I know wanted to vote leave. If anyone understands the benefits of being able to set our own laws it must be the lawyers, so it is difficult argue against them. However the cynic in me can’t help but feel there is an element of self-interest here as surely there is a mountain of work coming their way with treaties and business contracts needing to be renegotiated/drafted.
  • The Gibraltarian 823 – 84% of Gibraltarians turned up to vote in the EU referendum. 19,322 checked the box to stay in the EU and 823 voted to leave. And it's the 823 that has intrigued Twitter. Many theorised that if the UK voted to leave the EU, the Spanish would demand for the return of Gibraltar. So most people expected that a sweeping majority would vote to remain with the European Union. And they did. But who were the 823 who voted out? Is this a case of turkeys voting for Christmas?

The rise of populist extremism is here is to stay and today was a clear vote against the establishment.  But on a positive note, for the first time since I can remember the nation seem truly galvanised behind politics and long may it stay.  There has been so much political lethargy over the years as people have lost trust in the system and felt increasingly disenfranchised.  Perhaps this will be the awakening that reshapes the political landscape with an empowered Nation?

There will obviously be winners and losers out of this. However, what is done is done and we must look forward.  The coming years will present both opportunities and threats.  Here at Owen James, it is our job to make you aware of the threats so you can seize the opportunities. 

The business ramifications will be huge within financial services whether you are looking at the UK as financial centre; investor sentiment; and employment and data implications.  However, collectively we can prosper and we will seek to address this at A Meeting of Minds.

I am saddened how this will make us look on the international stage and these wounds will take a while to heal.  Now is the time to pick ourselves up and find ways to work together to ensure we flourish and retain what makes this country so great… our inclusiveness; democracy; resilience; ingenuity; and not forgetting our qwirky ways of course.


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