The UK funds industry has been digesting prime minister Theresa May’s twelve-point summary of her government’s objectives for the Brexit negotiations, which suggest Britain will leave the EU’s single market.
Despite being behind the “remain” movement before last year’s referendum, May has repeatedly said “Brexit means Brexit” and has offered the EU a “Hobson’s choice”, in the words of Henderson Global Investors.
This phrase means that the EU has to either accept or refuse what May suggested yesterday. Her aim is to have control over the amount of migrants coming to the UK but accepted this meant that access to the single market would not be possible.
David Page, senior economist at Axa Investment Managers, said that instead of access to the single market, she proposed a “comprehensive free trade agreement” between the EU and the UK with a modified customs union deal. This would allow the UK to negotiate other trade deals beyond the EU.
“This has been our expectation, but we believe that such an outcome is unlikely to prove an easy or quick process,” said Page.
Chris Cummings, chief executive of the Investment Association, was more positive about May’s plans.
"We welcome the prime minister's speech on Brexit, setting out the importance of avoiding a cliff-edge for financial services being provided to clients in the EU, and ensuring a pragmatic implementation period for the new trade deal with the EU,” said Cummings.
The Wealth Management Association, whose members look after £825 billion (€943.4 billion) of individuals’ investments in the UK, also welcomed May’s commitment to a “phased process of implementation” for key industries.
However, Henderson sounded a cautious note by saying the negotiations were likely to take place against a backdrop of rising inflation and negative real wage growth. “As a result, we remain cautious on the outlook for sterling and the UK consumer,” said the firm in a statement.
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