Businesses crave stability. We want a stable and predictable regulatory environment. As an entrepreneur, having risked much to invest in a business, you tend to assume that the regulatory environment you operate in is, and will remain, stable.
Sadly the UK regulatory environment, at the moment, is some way from this ideal.
Following a Brexit, many UK financial services, mine included, face the risk of losing their licences to operate in 27 EU countries. This would happen just 24 months from the date the government invokes Article 50 of the Lisbon treaty.
Planning in business has to take place over a very long time scale – 5 to 10 years is typical. When we set up Equinox we never imagined in our wildest dreams that Brexit could be a realistic possibility. We had faith in the UK environment as a business friendly place. That faith has turned out to be misplaced and had we known that Brexit was on the cards, perhaps we would have reconsidered choosing the UK as our home domicile.
David Cameron says he will “invoke Article 50 straight away following a Brexit vote” (presumably that means on 24 June). Michael Gove is reported as saying that he would not invoke Article 50 for some time and that the UK could still be in the EU by 2020. So do we have 24 months or 48 months to get the new licences?
Some Brexiteers have spoken about a Norway model, others a Switzerland model, others Canada, others Albania, others just want to rely on the WTO.
It is difficult for any UK financial services business to make concrete contingency plans at the moment as we don’t know what the new regulatory environment would look like or how long we’ll have to make the change. That is an uncomfortable position to be in.
Sometimes people ask me what contingency plans Equinox has for a Brexit. You can be sure that we will find a way successfully to continue our business in the EU. We will do whatever it takes. There can be little doubt that Europe’s other financial hubs will be only too eager to roll out the red carpet for any businesses that prefer to move their European headquarters to a more predictable business environment.
However, as a British person, it is sad to note that businesses in the United Kingdom face such a high level of political risk that other domiciles begin to look attractive.
Whichever way the referendum goes, irreparable damage to the UK’s reputation for a stable and safe business environment may already have been done.
13th June 2016