US business group the Chamber of Commerce, representing companies with US$590bn of investment in the UK, will this week warn that members are reviewing their plans for expansion in the country on concerns over post-Brexit access to the European Union’s (EU) single market.
According to the Financial Times, the USCC will present a document to the UK’s Cabinet Office stating that a post-Brexit UK would need continuing “unfettered access” to the European market in goods and services to retain and attract US investments.
The FT reports that USCC officials have already presented a briefing note to UK and EU ambassadors in Washington, which notes that any loss of the UK’s access to the single market would damage its competitive position by increasing the cost of doing business and exporting to the EU.
“Ultimately, these costs are likely to be borne by British workers and consumers,” the USCC states. “Already some US businesses have indicated that, without continued seamless free market access to Europe, investment and hiring decisions likely would favour other locations.”
Marjorie Chorlins, the USCC’s vice-president for European affairs, told the paper that uncertainty surrounding the terms of Brexit was driving US companies to make long-term “contingency plans” that involved expanding outside the UK. “They are looking long and hard at whether it makes sense to continue to expand their investment in the UK.” she said.
The document reportedly dismisses the claims of Brexiters that relatively low EU external tariffs mean the cost of leaving the single market and relying on terms of trade set under World Trade Organisation (WTO) rules would be low. “This is nonsense,” says the USCC. “In the real world of business, margins for tradeable goods are razor thin, and even a so-called ‘nuisance’ tariff of 3% can make or break a sale.”
The business group’s concerns extend to the potential loss of competitive advantage if the UK no longer has easy access to skilled workers from other EU member states, who currently fill its ‘skills gap’.
“We believe the UK must continue to allow the movement of labour without overly restrictive barriers,” the USCC writes. “In addition to ensuring that businesses in the UK will be able to employ EU nationals without undue bureaucratic burdens in the future, reassurances should be extended to the approximately 3m EU nationals today in the UK, representing about 6.6% of the workforce.
Other issues of concern, the FT reports, include the retention of “passporting” rights for financial services businesses that allow them to sell products into the EU from bases in the UK. “Should the UK lose this right, American companies will be forced to shoulder significant additional costs as they seek to maintain their rights to do business effectively across the European continent,” the USCC warns.
The top five sectors Asian fintech investors are interested in are data analytics, blockchain, lending, payments and regtech, according to Gary Hwa, EY regional managing partner.
On the third day of the Singapore Fintech Festival conference, there was a focus on specific applications of fintech innovation. One was trade finance, which is clearly is ripe for a revolution.
Kicking off day two of the Singapore Fintech Festival, Deloitte Chairman David Cruikshank said that fintech is significant for three reasons. First, customer expectations of services are higher than ever. Second, barriers to entry are lower than before. And finally, financial institutions (FIs) face a threat of what a competitor might do.
The EU and US’ shift in accounting standards may bring balance sheet losses and increase credit risk, according to James Elder, director of risk services at Standard & Poor’s (S&P) Global.