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Treasury to Begin Brexit Scrutiny

Experts have been called to Parliament to give evidence on the progress of the U.K.’s Brexit negotiations.

  • Joe McGrath

The U.K. Parliament’s Treasury Committee is to hear the first evidence on Wednesday in its inquiry into the U.K.’s economic relationship with the European Union, amid growing concerns over the stalled talks.

On Friday, committee chair Nicky Morgan called the inquiry necessary to assess progress on transitional arrangements, what the future relationship between the U.K. and the EU will look like, and discuss potential fallout from failing to secure a trade deal.

“The progress and outcome of the Brexit negotiations will have profound implications for the economy and public finances. The Committee will consider the short-term risks to an orderly withdrawal, and the shape of the long-term economic relationship,” Morgan said in a press statement. “Firms and individuals need certainty about the situation after March 2019. The priority of the inquiry, therefore, will be to consider the negotiation, design, and governance of transitional arrangements.”

[II Deep Dive: Paris, the City Beckoning Brexit Bankers]

The initial witnesses to give evidence on Wednesday will be Ivan Rogers, the former U.K. representative to the European Union, Alan Dashwood, former director in the Council of the EU Legal Service, and Catherine Barnard, a Cambridge University EU Law professor. European Union leaders have likewise agreed to begin preparations for U.K. trade talks following the October Brussels summit, the BBC reported.

U.K.-based fund managers are tracking developments with keen interest, as the nation is home to roughly one-third of all EU assets — about £8 trillion ($10.5 trillion) — according to the Financial Conduct Authority.

In a speech to investment managers last Tuesday, Andrew Bailey, chief executive of the FCA, urged the EU and U.K. to come to an arrangement that would not disrupt the business models of hundreds of financial companies.

“Investment managers in the U.K. manage just over £1 trillion on behalf of overseas authorized funds,” he said. “Over 80 percent of those funds are domiciled in either Luxembourg or Dublin. This requires co-operative arrangements which are well established.”

“Let’s not beat about the bush,” Bailey continued. “This model works — it works well for investors and for investment managers. So why disrupt it, or, put another way, must it be disrupted?”

Some financial services firms have already triggered their contingency plans to move some jobs away from London. Specialist recruiters are advertising for individuals interested in relocating to other European Union cities.

In a rare Tweet on Thursday, Goldman Sachs CEO Lloyd Blankfein said, “Just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I'll be spending a lot more time there. #Brexit.”