EU Referendum ‘Leave’ vote: industry reaction
Written by Michelle Stevens
The UK public has voted to leave the European Union in a referendum held on Thursday, 23 June. The overall results of yesterday’s poll, declared at 6am this morning, were a 58 per cent vote to leave, versus a 48 per cent vote to remain. Turnout across the UK was high at almost 72 per cent. However, opinion was split across the regions, with London, Scotland and Northern Ireland recording a strong ‘In’ vote, while voters in Wales and England (outside of the capital) favoured an ‘Out’ decision.
Prime minister David Cameron, who had campaigned for a ‘Remain’ vote, has announced that he will be stepping down in the autumn. The EU Referendum result also sent shock waves through the financial markets this morning, with the pound dropping to its lowest level against the dollar since 1985, and the FTSE opening nearly 9 per cent down.
With many more developments still to come, FStech rounds up initial reaction from the finance and technology sectors.
The Financial Conduct Authority (FCA):
“This has significant implications for the UK. The FCA is in very close contact with the firms we supervise as well as the Treasury, the Bank of England and other UK authorities, and we are monitoring developments in the financial markets. Much financial regulation currently applicable in the UK derives from EU legislation. This regulation will remain applicable until any changes are made, which will be a matter for government and parliament. The longer term impacts of the decision to leave the EU on the overall regulatory framework for the UK will depend, in part, on the relationship that the UK seeks with the EU in the future. We will work closely with the government as it confirms the arrangements for the UK’s future relationship with the EU.”
Anthony Brown, CEO of the British Bankers’ Association (BBA):
“Customers should rest assured their banking services will continue as normal. People will be able to take money out of cash machines, exchange currency and have full access to their banking services. Any consequences of the referendum result will take some time to resolve and any changes to banking will take place over several years. A significant amount of contingency planning has already been undertaken and the industry is very well prepared, and have increased capital and liquidity. Banks will now assess what the result means for their customers and staff in the long term.
Mark Carney, governor of the Bank of England:
“Inevitably, there will be a period of uncertainty and adjustment following this result. There will be no initial change in the way our people can travel, in the way our goods can move or the way our services can be sold. And it will take some time for the United Kingdom to establish new relationships with Europe and the rest of the world. Some market and economic volatility can be expected as this process unfolds. But we are well prepared for this. The Treasury and the Bank of England have engaged in extensive contingency planning and the chancellor and I have been in close contact, including through the night and this morning. The bank will not hesitate to take additional measures as required as those markets adjust and the UK economy moves forward. These adjustments will be supported by a resilient UK financial system – one that the Bank of England has consistently strengthened over the last seven years. The capital requirements of our largest banks are now ten times higher than before the crisis. The Bank of England has stress tested them against scenarios more severe than the country currently faces.”
Elizabeth Budd, financial regulation expert at law firm Pinsent Masons:
“Assuming the UK financial services industry wishes to continue to trade with the EU with the same freedoms as at present, broad equivalence with EU financial regulation will be in its best interests. Banks, insurers and wealth management firms will now have to identify the core requirements stemming from EU regulations and directives that they need in order to do so, and then lobby the government to stick to these requirements as they negotiate the terms of the UK’s exit from the EU.”
Nigel Green, founder and CEO of financial consultancy the deVere Group:
“Britain is filing for divorce from the EU – it’s a shock event. The Brexit victory is a victory for uncertainty across international financial markets. Brexit-triggered volatility is now only just beginning; we can expect it to potentially last up to two years. Due the far-reaching impact of this vote, Brexit will inevitably affect the British and the European economies and the wider global financial markets. The decision may have been taken in the UK but it will impact the rest of the world too.”
Michael Kent, CEO and founder of money transfer startup Azimo:
“We’re disappointed that the British electorate has decided to leave the European Union. Here at Azimo we passionately believe that the world needs less borders not more. As we’ve said before, this is also a blow to London’s financial services industry: many companies here depend on both EU market access and the ability and legal right to passport their services to the rest of Europe. I anticipate that we’ll see many finance players moving some, or potentially all, operations to elsewhere in Europe. Frankfurt, Amsterdam and Dublin are all obvious candidates… The good news is that the FinTech industry is thriving across the whole of Europe at the moment, should London’s position as the heart of European FinTech now change as a result of this vote.”
James Blake, CEO of data analytics startup Hello Soda:
“We are optimistic of the potential opportunities there may be in light of the result such as the depreciation of the currency increasing our international sales potential. We respect the votes of the whole of the United Kingdom and we look forward as an outward looking business. We will continue to seek to expand into new markets and to create jobs in a post-Brexit environment, and we believe that we are well positioned in the market to push through any short-term instability. The nature of the technology industry means that challenges and boundaries have never been less significant and we are confident the future for UK tech businesses operating internationally will remain strong.”
Ashley Smith, SVP Business Development at fund data utility Silverfinch:
“With the UK voting to leave the European Union, this will increase the importance of making sure companies have the right data connectivity with stakeholders to meet regulatory requirements. While Solvency II will carry on for continuing members of the European Union, UK companies will also have to observe the rules until such a time as a replacement is agreed – and whatever happens UK companies will have to meet the regulations for their European operations.”
Simon Black, CEO of payments firm and e-money specialist the PPRO Group:
“The UK, led by London, has rapidly become a global centre for financial technology innovation. With an estimated 500 FinTech companies in the UK, Brexit will cost the taxman around £5 billion over the course of the next 10 years, following the inevitable exit of the FinTech companies themselves. As well as London being a global financial hub, the UK offers specific regulatory benefits, that when combined with a massive pool of talent have made the UK the natural choice to be located both from a European perspective and for some companies, even as a global base. But with their status as financial institutions recognised across the EU and EEA under threat, all of these businesses will not wait for trade deals to be resolved. They will immediately begin forming plans to relocate at least some of their operations, and the majority of new jobs will be outside of the UK.”
Georg Ludviksson, CEO of PFM software provider Meniga:
“Being part of the EU was a reason for us to be in the UK, but it wasn't the only one. We are part of a vibrant London FinTech scene, and have benefitted from London's talent pool, transport links and of course access to the financial system. As long as these things remain intact, we and other UK growth companies will be fine. Policymakers will now have to focus on protecting the landscape that has enabled tech and especially FinTech startups to thrive in the UK. We are confident they will do so and have no plans to leave London.”
Peter Galdies, development director at data governance and compliance firm DQM GRC:
“The many organisations which already manage or contain personal data relating to EU/EEA state citizens (clients, prospects or employees) will continue to have to manage that data according to the requirements of the GDPR regardless of ‘Brexit’, or they will be in breach of the GDPR and risk large fines. So for many organisations nothing will change – the GDPR will apply even when we leave.”